European Markets Pulled Back Slightly On Tech Weakness

(RTTNews) - The European markets ended Friday's session with modest losses, due to the weak performance of technology stocks. The sector was impacted by the disappointing financial results reported by tech giants Google and Microsoft in the U.S. late Thursday. However, investors took solace in the comments made by Fed Chairman Ben Bernanke during his second day of testimony before Congress yesterday.

Federal Reserve Chairman Ben Bernanke stated yesterday before the Senate Banking Committee that the central bank intends to maintain highly accommodative policy for the foreseeable future. For the second day in a row, Bernanke told Congress that inflation remains in check, allowing the Fed to keep unprecedented support measures in place until the unemployment rate significantly improves.

"We have not changed policy. We are not tightening policy," Bernanke said during the question and answer session, referring to the bank's $85 billion a month bond buying program.

"It is way too early to make judgment on whether the Fed will slow down asset purchases at its September meeting," Bernanke said to the Senate panel. Market experts have targeted the September meeting for a possible tapering back of the quantitative easing plan.

German Chancellor Angela Merkel ruled out a second haircut on Greek debt and warned that this could create massive insecurity among investors.

"I do not see a debt haircut for Greece," Merkel told journalists in Berlin. "This could lead to such a massive insecurity among investors in the Eurozone that all what we have done these past years would be put into question again," she said.

The European Central Bank tweaked its collateral rules, expanding the list of collateral accepted and reducing the haircuts applicable to asset-backed securities, in an effort to boost lending to struggling small businesses.

The measures, which ECB said, will have an overall neutral effect on the amount of collateral available, were announced by the Governing Council late Thursday in a biennial review of its risk control framework.

The ECB decided to reduce the haircut applicable to asset-backed securities, or ABS, eligible under the permanent and temporary Eurosystem collateral framework, to 10 percent from 16 percent.

The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.10 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.12 percent.

The DAX of Germany dropped by 0.04 percent and the CAC 40 of France fell by 0.06 percent. The FTSE 100 of the U.K. closed nearly unchanged, with a gain of 0.00 percent and the SMI of Switzerland lost 0.01 percent.

In Frankfurt, SAP declined by 2.35 percent. The stock extended its losses from the prior session, after the company reduced its revenue forecast.

In Paris, Vivendi increased by 2.00 percent. According to reports, the media giant spurned an $8.5 billion offer for its Universal Music Group division from Japanese telecom company SoftBank Corp.

Remy Cointreau fell by 3.31 percent, after JP Morgan downgraded the stock to "Underweight" from "Neutral."

In London, Vodafone finished higher by 1.12 percent, after reporting its quarterly sales numbers.

HSBC dropped by 0.50 percent, after Investec Securities downgraded the bank to "Hold" from "Buy."

TUI Travel decreased by 1.42 percent, after Commerzbank downgraded the stock to ''Hold'' from ''Buy.''

Germany's producer price inflation accelerated in June, and the figure matched economists' expectations, latest data showed Friday. The producer price index increased 0.6 percent on an annual basis in June, following a 0.2 percent gain in May, the Federal Statistical Office said. The growth rate for June was in line with economists' forecast.

France's leading index increased further in May, with most of the components making positive contributions, in a sign that economic activity may slowly begin to recover in the near term. The leading economic index increased 0.5 percent sequentially to 115.3 in May, marking the fourth rise in five months, data from a survey by the Conference Board showed Friday.

Confidence among British households about the values of their residential properties increased to an all-time high in July, survey data released by Markit Economics and Knight Frank showed Friday. The headline house price sentiment index, which measures homeowners' views of the current values of their houses, increased to 56.8 from 53.2 in June, hitting the highest level since the survey started.

The U.K. budget deficit for June exceeded economists' expectations, suggesting little contribution to public finances from the economic recovery that is underway. Nonetheless, underlying public finances remain on track to meet the government target.

Net borrowing excluding interventions declined to GBP 8.5 billion in June, data from the Office for National Statistics showed Friday. The PSNB figure compares with last year's GBP 11.9 billion borrowing and the consensus forecast of GBP 8 billion.