- US thrashes out debt ceiling deal
- ECB to cut rate if market volatility resumes
- DAX closes at all-time high
- German inflation holds steady
- UK inflation to ease in September, economists predict
FTSE 100: 0.88%
CAC 40: 0.04%
FTSE MIB: 0.24%
IBEX 35: -0.03%
Stoxx 600: 0.42%
European equities ended the week mixed as the US lawmakers continued to work to reach a deal on extending the nation's borrowing limit and reopening the federal government.
The Obama administration and Republicans met on Friday to discuss a proposal to raise the $16.7trn debt ceiling for the next six weeks to avoid a default that would otherwise come next week.
The Treasury will exhaust its borrowing authority on October 17th and would run out of funds to pay all of its bills sometime between October 22nd and October 31st, according to the Congressional Budget Office.
The government went into partial shutdown on October 1st after failing to approve a budget as lawmakers clashed over Obama's controversial health care bill.
"While the impact of the shutdown is nowhere near as severe as hitting the debt ceiling would be, the longer it goes on, the more it will weigh on growth in the fourth quarter and therefore damage the recovery," said Craig Erlam, Market Analyst at Alpari.
Erlam raised questions over the Republicans' short-term debt ceiling increase proposal, saying it "doesn't appear to include an agreement on the budget which would end the government shutdown".
European Central Bank President Mario Draghi said yesterday the prolonged US debt stalemate could hurt the global economy.
He also reaffirmed his vow to keep interest rates low, saying the ECB stands ready to cut borrowing costs if market volatility resumes.
"The Governing Council has unanimously agreed to incorporate an easing bias that explicitly provides for further rate reductions, should the volatility in money market conditions return to the levels observed in early summer," Draghi said at the Economic Club of New York yesterday, according to Bloomberg.
German, UK inflation
German inflation remained unchanged in September, in line with market expectations.
The Federal Statistics Office Destatis said the consumer price index came in at 1.6% last month, the same as in August.
Germany's DAX 30 index closed at an all-time high on Friday, up 0.45% to 8,724.83.
In the UK, economists expect inflation to have slowed in September. They predict next week's report from the Office for National Statistics to show consumer prices rose 2.6% from a year earlier compared with a rise of 2.7% in August.
Separately, data today showed construction output declined in August by 0.1% from July but was 4% higher than a year ago, driven by a rise in new work.
Royal Mail launches IPO
Royal Mail's shares
jumped as high as 38% to 456p as the UK postal service made its debut on the London Stock Exchange today.
Barclays edged higher after announcing it has signed up to the UK government's Help to Buy mortgage scheme.
Swedish Match declined after saying earnings at its US cigars and chewing tobacco unit will fall.
A gauge of mining companies including Anglo American and Vedanta Resources gained as copper prices rose for a second day in London.
Geberit fell after Goldman Sachs cut its rating of the Swiss maker of toilets and bathroom-piping systems to 'sell' from 'neutral'.
Danish cancer drug developer Genmab advanced after saying its ofatumumab drug showed a significant reduction in cumulative number of new brain lesions in a multiple sclerosis study.
German utilities EON SE and RWE AG slumped along with a number of sector peers on the Stoxx 600.
Other asset classes mixed
The euro rose 0.26% to the 1.3555 US dollar.
Brent crude futures fell $0.648 to $111.080 per barrel on the ICE.