3:00 PM Frankfurt – The European indexes rose on speculation that central bank may step up actions as the euro area producer price inflation declined to a 27-month low and UK mortgage approvals fell in May. Spanish unemployment dropped in June. BlackRock agreed to acquire Swiss Re Private Equity Partners.
European markets gained in early trading on optimism that central banks may eke out more stimulus measures for economic growth.
Weaker-than-estimated economic data from U.S., Europe and China yesterday fueled speculation that additional measures may be needed to shore up confidence and revive manufacturing.
Italy''s cash budget deficit fell by €15 billion in the first-half, the Ministry of Economy and Finance said in a statement today.
In Paris trading, the CAC-40 Index gained 9.24 or 0.3% to 3,249.26 and in Frankfurt the DAX Index edged higher 43.35 or 0.7% to 6,538.35.
The yield on Spain’s benchmark 10-year bonds dropped six basis points to 6.35%. Italian 10-year yields declined three basis points to 5.71%.
Robert E. Diamond Jr, the chief executive of Barclays resigned after politicians stepped up heat and welcomed his resignation. The pressure on Diamond intensified after Labor Party chief demanded an independent investigation in the company.
Ed Miliband, leader of the opposition Labour Party said that Diamond’s decision to resign was “necessary and right” and added “this is about the culture and practices of the entire banking system” which is why “we need an independent, open, judge-led public inquiry.”
Diamond resigned a day before he is scheduled to testify before the Treasury Select committee, responsible for probing London interbank offered rate or Libor setting.
Diamond said in a statement today, “The external pressure placed on Barclays has reached a level that risks damaging the franchise – I cannot let that happen.”
More fallout at Barclays are likely in the next few days. On Monday, Marcus Agius resigned as chairman and recently appointed chief operating officer Jerry del Missier, long time associate of Diamond is expected to leave as well according to sources at the bank.
At least 20 regulatory authorities are investigating the actions of several banks in Europe and U.S. including global banks HSBC, JP Morgan and Wells Fargo and Citigroup.
Euro-zone PPI Drops
Euro-zone producer prices fell 0.5% from a month ago in May following a 0.1% rise in April, the latest data released by Eurostat showed today.
On an annual basis, the price index gained 2.3% in May.
Spanish Unemployment Declines
Unemployment in Spain declined 2.1% from a month ago in June, the labor ministry data showed.
The number of unemployed fell by 98,853 from the month earlier to 4.62 million in June. Unemployment among youth under 25 years fell 7.61% on a monthly basis.
On an annual basis, total registered unemployment increased by 493,468 persons or 11.97% in June.