- Europe's inflation rate falls
- Manufacturing activity in Eurozone improves
- Unemployment rate remains high in Euro-area

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European equities edged higher at close Friday as the inflation rate unexpectedly fell and manufacturing activity in the 17-nation bloc improved.

The Euro-area's annual inflation rate dropped to 2% in January, compared to 2.2% a month earlier, according to European Union's statistics office Eurostat in Luxembourg. Economists had forecast the rate to remain unchanged.

It comes as high unemployment and austerity measures grip Europe. Eurozone unemployment stood at 11.7% for the third consecutive month in December, said Eurostat.

In separate statistics showing signs the crisis-hit region may be past its worst point, the Eurozone reported healthy manufacturing figures. Monthly purchasing managers' index for the area, based on a survey of business executives, rose to 47.9 in January from 46.1 in December, data company Markit said. The result compared to an earlier reading for January of 47.5.

It signalled an end to a long-running decline in Europe's manufacturing activity, suggesting the industrial industry was close to stabilising.

Banks in the spotlight

The European Central Bank (ECB) said its 27 European financial entities will return €3.484bn on February 6th - the second round of repayments from last year's Long-Term Refinancing Operations.

Shares of nationalised Spanish bank Bankia tumbled after regulator CNMV lifted its ban on short-selling.

Credit Agricole announced that it will take a €2.68bn goodwill impairment charge in the fourth quarter and pointed to tighter regulatory requirements. The news comes three weeks ahead of the French bank's earnings presentation.

HSBC Holdings received regulatory approval for the $7.4bn sale of its stake in Ping An Insurance to Thai billionaire Dhanin Chearavanont's company Charoen Pokphand Group. Analysts at Investec called the deal a "mild disappointment".

Barclays Chief Executive Officer Antony Jenkins said he would waive his bonus for 2012 as the bank tries to mend its image following a series of scandals including its fine for LIBOR rigging.

Euro and Brent crude higher

The euro/dollar jumped 0.89% at 1.3700.

Front month Brent crude futures rose 1.189 dollars to the 116.940 dollar level on the ICE.

RD

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