By Michele Maatouk European stocks edged higher Thursday, while the euro was stable against the dollar, as investors mulled the latest developments in the U.S. budget negotiations ahead of interest rate announcements by the European Central Bank and the Bank of England. Mixed messages on the progress of the U.S. "fiscal cliff" talks kept investors cautious. Treasury Secretary Tim Geithner said Wednesday that the Obama administration was willing to allow the economy to go over the fiscal cliff if Republicans didn't agree to raise tax rates on the wealthy. Meanwhile, President Barack Obama said he was hopeful that fiscal cliff issues could be resolved in a week. "It is worth highlighting that a growing number of clients are already discussing the possibility of 'fiscal slope' rather than 'fiscal cliff'--that is the expectation that a failure to reach a compromise before year-end need not produce sustained market losses," said currency strategists at Citigroup in a note to clients. Investors were looking ahead to interest rate decisions later in the day. The ECB is widely expected to keep rates on hold at 0.75%, while the BOE is also seen standing pat, at 0.5%. On the corporate front, shares in EADS rallied as investors welcomed its plan for a major share-structure overhaul. On the downside, GDF Suez shares tumbled after it said its earnings this year would be hit by French energy tariffs. At the same time, Bank of America Merrill Lynch downgraded the stock to neutral from buy, saying that the guidance issued by the company late Wednesday implies 2013 earnings per share would be around 10%-20% below consensus expectations. Other utilities followed suit, with E.ON and RWE also in the red. Deutsche Bank slipped, as U.S. securities regulators look into allegations the bank hid billions of dollars of paper losses during the financial crisis, according to people close to the investigation. In London, Rolls-Royce slumped after the company said it has passed information to the U.K.'s Serious Fraud Office relating to concerns over bribery and corruption involving intermediaries in overseas markets. The BOE and ECB rate announcements are due at 1200 GMT and 1245 GMT, respectively. In terms of data, U.K. trade figures are due at 0930 GMT, while the final reading of third-quarter euro-zone gross domestic product is at 1000 GMT. In the U.S., initial jobless claims will be eyed at 1330 GMT, ahead of Friday's key nonfarm payrolls release. Latest Price Change From Previous Close FTSE 100 5905.34 +0.2% DAX 7511.98 +0.8% CAC-40 3608.51 +0.5% Stoxx Europe 600 278.25 +0.5% Hang Seng 22249.81 -0.1% Nikkei 225 9545.16 +0.8% Shanghai Composite 2029.24 -0.1% Dow Jones Industrials 13034.49 S&P 500 1409.28 Level In Late New York Trading (Previous Session) EUR/USD 1.3069 1.3069 USD/JPY 81.17 81.20 GBP/USD 1.6105 1.6093 Change From Previous Close Dec. German Bund Future 143.17 -0.11 Jan. Nymex Crude Oil 87.88 0.00 Jan. Brent Crude Oil 108.87 +0.06 Gold 1690.70 -1.80 Write to Michele Maatouk at michele.maatouk@dowjones.com

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