2:30 PM Frankfurt – Finance ministers in Europe raised combined limit of bailout funds to $930 billion that may have to be revised higher in a year. Euro area annual inflation eased in March. German and Spanish retail sales fell in February.

European indexes edged higher after European finance ministers agreed to increase the size of the bailout funds to tackle future sovereign crisis.

The group included the existing bailout funds of long term commitment of €200 billion and raised the combined ceiling of the temporary and permanent funds to €500 billion.

Finance ministers also agreed to commit additional €150 billion in contributions to the International Monetary Fund.

The increase in the size of the bailout funds after 18 months of financial crisis was welcome by investors and market indexes gained more than 1% across the region. However, the revised fund bailout size may fall short of the needs in the next two years with the uncertainty in Spain and Italy and continued economic weakness in Portugal, Ireland and Greece.

In Paris trading, the CAC-40 Index surged 48.23 or 1.4% to 3,429.35 and in Frankfurt the DAX Index edged higher 80.23 or 1.2% to 6,955.47.

For the week, the CAC-40 Index fell 1.3% and the DAX Index declined 0.6%.

Italian 10-year bonds yield fell 4.3 basis points to 5.2% and yield on similar Spanish government bonds decreased 3.9 basis points to 5.44%.

Euro-zone Inflation Eases

Euro-zone annual inflation eased to 2.6% in March from 2.7% in February, flash estimate published by Eurostat showed today.

Inflation continues to stay above the European Central Bank's target of below 2%.

German Retail Sales Drop

Germany's retail sales fell unexpectedly for a second consecutive month in February, data released by the Federal Statistics Office showed today.

Retail sales dropped 1.1% from a month ago in real terms in February, following a 1.2% fall in January.

Annually, retail sales rose 1.7% in February matching the pace in January.

Spanish Retail Sales Decline

Spain's retail sales declined 3.4% in February from a year ago compared to the revised 4.6% decrease in January, the statistics office INE said.

Food sales rose 0.1% annually, while non-food product sales declined 5.8% in February.

French Deficit Narrows

The French budget deficit narrowed to 5.2% of gross domestic product in 2011 compared to 7.1% in 2010, data from the statistics office Insee showed today.