MW: Europe stocks stay higher after ECB stands pat
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets held on to gains on Thursday, after the European Central Bank kept interest rates unchanged as expected, while investors watched developments in Washington regarding the so-called fiscal cliff.
The Stoxx Europe 600 index XX:SXXP +0.45% rose 0.4% to 278.13, setting it on track for a fourth-straight day of gains.
Shares of European Aeronautic Defence & Space Co. FR:EAD +7.44% jumped 7.7% after the firm said late Wednesday that it would undertake a major share-structure overhaul. It will replace its current structure with a “normal company governance scheme,” which will result in Daimler AG DE:DAI +0.88% and Lagardere SCA FR:MMB -1.09% reducing their stakes in the firm. See: EADS announces share structure overhaul
Daimler said Thursday it sold off a 7.5% stake in EADS as planned. Its shares rose 1.3%, while those of Lagardère rose 0.1%. See: Daimler completes sale of 7.5% stake in EADS
Pointing in the other direction, shares of GDF Suez SA FR:GSZ -10.99% slumped 13%, after the energy distributor late Wednesday confirmed its financial targets for 2012, but said recurring income would decline in 2013. The company’s chairman and Chief Executive Gerard Mestrallet further said Thursday that GDF expects to lose around 185 million euros ($242.2 million) in 2012 as regulated energy tariffs set by the French government won’t offset supply costs. See: GDF Suez earnings to be hit by French tariffs
European interest rates were also in focus on Thursday, after the European Central Bank left its key lending rate at a record low 0.75%. Attention now turns to the ECB President Mario Draghi’s monthly news conference at 1:30 p.m. London time, or 8:30 a.m. Eastern, where he is expected to reiterate that the bank is ready to formally launch its aggressive bond-buying program.
The Bank of England also stood pat and left the size of its asset-purchase program at 375 billion pounds ($604 billion), while keeping its lending rate at a record low 0.5%, where it has stood since March 2009. See: Bank of England leaves QE program on pause
Investors also tracked developments in U.S. budget negotiations.
President Barack Obama and House Republican leaders dug in on their positions Wednesday. See: Obama spurns Republican fallback plan .
“A growing number of Republicans have indicated that they are willing to accept a deal that will allow the Bush tax cuts for the most affluent to expire in 2013,” analysts at Danske Bank said in a note.
“This is the most important demand by the Democrats in order to reach an agreement,” they said.
Bloomberg News reported after the European market close on Wednesday that about 40 Republicans had joined a bipartisan call to break the budget deadlock.
One of the petition signers, Representative Mike Simpson of Idaho, told the news service that “it’s pretty obvious Obama won the election, and he promised he was going to raise taxes on the wealthiest.” See: Obama spurns Republican fallback plan
Among notable movers in Europe, shares of Rolls-Royce Holdings PLC UK:RR -3.07% fell 3% in London, after the power-systems firm said individuals and the company could be prosecuted in cases related to overseas corruption and bribery.
Also in the U.K., shares of oil firm Royal Dutch Shell PLC UK:RDSB +1.05% RDS.B -0.06% rose 1.1%, while miner Anglo American PLC UK:AAL +1.38% put on 1.4%.
The FTSE 100 index UK:UKX +0.32% added 0.3% to 5,912.44.
France’s CAC 40 index FR:PX1 +0.19% rose 0.2% to 3,598.80, with shares of Technip SA FR:TEC +1.16% up 1.1%. The oil-field-services firm said it was awarded a contract to develop the Starfish Field in Trinidad and Tobago.
And in Germany, the DAX 30 index DX:DAX +0.97% traded 1% higher at 7,527.93, attacking a 7,600 intra-day-high level from May 2011, which would leave the index to challenge an almost 5-year high from January 2008 of around 7,720.
Shares of Beiersdorf AG DE:BEI +1.73% rose 2%, after the consumer-products firm raised its sales growth forecast for 2012 to well over 4% from 3-4% previously.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
