- Fed's Bullard signals October stimulus cut
- Germans head to polls Sunday
- Euro-area consumer confidence rises
- EU changes budget policies to support periphery
- UK public finances improve
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European equities ended the week mixed after Federal Reserve Bank of St. Louis President James Bullard said the central bank may reduce stimulus at its next policy meeting.
Just two days after the Fed's announcement that it would keep up its $85bn monthly asset purchases, Bullard said a tapering could be on the cards for an October meeting.
In an interview with Bloomberg ahead of his speech in New York on Friday, he called October a "live meeting" because "it's possible you could get some data that change the complexion of the outlook and could make the committee be comfortable with a small taper in October".
The Fed on Wednesday decided to keep its monetary easing unchanged following a two-day policy meeting, surprising economists who had predicted a cut of between $10bn to $15bn per month.
"That was a borderline decision" after "weaker data came in," Bullard said.
Bullard has previously said that the central bank should not rush into trimming its quantitative easing.
The Fed wasn't the only central bank to shock markets this week as the Reserve Bank of India (RBI) announced a 25 basis-point rise in its main policy rate, to 7.5% from 7.25%, although it unwound some short-term tightening measures.
German election looms
Germans will head to the polls on Sunday to vote in the federal election.
An INSA opinion poll on the German election published Friday showed the opposition Social Democrats climbing one percentage point to 28%, 10 points behind Angela Merkel's Christian Democrats party. The parties both fell short of a majority.
Free Democrats, the governing coalition's partners, failed to reach the 5% threshold they need to enter parliament.
Another survey, conducted by telephone for the public television network ZDF, showed the Chancellor's centre-right party is backed by 40% of voters, while the centre-left Social Democrats earned the backing of 27%.
The Free Democrats, were supported by 6%.
Despite Merkel's popularity, the fresh polls signal a difficult road ahead this weekend, meaning she may have to form a government with another party.
Also in Europe, consumer confidence rose less than expected. The European Commission's index of consumer sentiment increased to minus 14.9 in September from minus 15.6 in August, missing the minus 14.5 estimate.
EU regulation, Britain's public finances
European finance officials have approved a change to the region's budget policies which allows for lowered austerity requirements among the hardest hit countries in the Eurozone.
"The decision to allow an amendment to a calculation by the European Commission to alleviate the requirements in relation to the size of budget deficits being run within each country is certainly controversial and has been met with significant criticism," said Joshua Mahony, Research Analyst at Alpari.
"There are worries as to whether such a measure would allow nations to resume normal business and cast aside austerity measures with significantly improved data."
However, Mahony noted that many see this as a necessary towards loosening the framework for more troubled nations to pull themselves out of financial ruins.
In the UK, public finances showed a smaller than anticipated deficit in August, supported by a drop in spending by government departments. The deficit was £13.157 in August, the Office for National Statistics said, compared to £14.409bn the same month last year and forecasts of £13.5bn.
Tate & Lyle, BP
Shares in food and sweeteners manufacturer Tate & Lyle fell after the Credit Suisse reduced its rating from 'outperform' to 'neutral'.
rallied as investors speculated on rumours of a takeover bid by US energy giant Exxon Mobil.
Adidas declined after cutting the lower end of its profit forecast for 2013 by 7.9%.
Mediaset SpA gained after Morgan Stanley increased its target price on the broadcaster controlled by former Italian Prime Minister Silvio Berlusconi to €3.65 from €2.15.
Direct Line dropped after Royal Bank of Scotland sold 300m shares at 210p each in its third sale of a stake in the insurance company.
A gauge of miners including Randgold Resources, Antofagasta and Vedanta Resources snapped Thursday's rise as the prices of gold, silver and copper retreated.
Brent crude rises
Brent crude futures rose $0.321 to $109.110 per barrel.
The euro fell 0.06% to the 1.3522 US dollar.