- Traders welcome Fed's QE decision
- US existing home sales rise
- US unemployment claims increase
- ECB fears banking reviews will deter investors
FTSE 100: 1.02%
CAC 40: 0.63%
FTSE MIB: 1.16%
IBEX 35: 0.69%
Stoxx 600: 0.47%
European equities extended gains Thursday as investors welcomed the Federal Reserve's surprise announcement that it would maintain monetary stimulus.
The central bank's Federal Open Market Committee (FOMC) said it keep up its $85bn of monthly asset purchases until it sees more evidence of recovery.
"Conditions in the job market today are still far from what all of us would like to see," Fed Chairman Ben Bernanke said at a press conference in Washington after European markets closed Wednesday.
Economists had expected the Fed to reveal a tapering of between $10bn to $15bn per month. Bernanke first indicated a trimming of the bond buying programme this year in May.
ETX Capital Market Strategist Ishaq Siddqi predicts the Fed will announce a of trimming its bond buying programme at the end of the year.
"Bernanke had his chance to fire the first round but held back," he said. "His reasons appear to be valid; there's going to be a big fiscal showdown in US Congress over the new budget to lift the debt ceiling. That said, Bernanke is on his way out with a new Fed president replacing him at the start of 2014.
"Given that market participants were prepared for tapering and that logically, it would have been sensible for Bernanke to start the taper ball rolling, I feel the Fed failed to seize on the opportunity to send the market a strong message by withdrawing its favourite drug.
"Risk sentiment may have got a nice kick up after the Fed meeting but the momentum behind this rally is certainly not credible, just like the Fed's reputation at the moment."
Also in the US, a report on existing home sales showed an increased annualised rate of 5.8m in August from 5.39m the month earlier, trouncing the consensus for an annualised rate of 5.25m.
The Federal Reserve Bank of Philadelphia's monthly manufacturing index improved to 22.3 points from 9.3 in August, beating expectations for a reading of 10.3.
Initial weekly US unemployment claims rose by 17,000 to 309,000 in the week ended September 8th, compared to the previous week's 294,000 and economists' estimates of 330,000.
The country's current account deficit improved to -$98.9bn in the second quarter, from -$104.9bn in previous three months. Economists had expected -$97.0bn.
In the UK, the Confederation of British Industry's total orders index for UK manufacturing in September rose to +9.0, from 0.0 the month before (Consensus: +2).
As an aside, economists at UBS raised their forecasts for gross domestic product growth in the UK to 1.5% for 2013 from 1.1% and to 2.3% in 2014 from 1.8% previously.
UK retail sales grew by 2.1% year-on-year in August, versus forecasts for a gain of 3.3%, another report showed.
ECB fears bank review will scare investors
The European Central Bank has voiced fears that investors might be scared way by its reviews of banks next year when it takes over supervision of all euro-area lenders.
The ECB will conduct a risk review, analyse banks' balance sheets and implement stress tests in collaboration with the London-based European Banking Authority.
The central bank is trying to avoid releasing conflicting numbers at different times, particularly for banks that are financially unstable, at risk of deterring investors.
ECB Executive Board member Peter Praet and Governing Council member Ewald Nowotny said two companies must avoid giving different estimates of how much extra capital banks will need to raise.
Meanwhile, the Swiss National Bank said its cap on the franc remains "very, very important" for the country's economic growth despite signs of recovery in Europe.
The SNB has kept its ceiling on the franc at 1.20 per euro. The central bank set the cap in September 2011, citing the risk of deflation and a recession after investors concerned about the region's sovereign debt crisis pushed the franc close to parity with the euro.
"The global recovery is very slow," Swiss National Bank President Thomas Jordan told Swiss Radio SRF in an interview after the Zurich-based central bank's quarterly policy review on Thursday. "The risks may have receded, but they've not disappeared."
Miners gain on rising commodities
Randgold Resources and Fresnillo advanced as the price of gold and silver rose.
Petrofac jumped after announcing its consortium won a contract for works on KLPE's integrated petrochemicals complex and infrastructure project in Kazakhstan.
Asos surged as Jefferies International issued a 'buy' rating after the online fashion retailer beat fourth quarter forecasts.
ThyssenKrupp gained after Steinbrueck, who leads the opposition party Social Democrats, said it was "imperative" to prevent a break-up of the German steelmaker.
Havas declined after Barclays downgraded the French advertising company to 'equal weight' from 'overweight'.
Euro rises, oil falls
The euro bounced up 0.11% to the 1.3536 US dollar.
Brent crude futures fell $0.600 to $109.940 per barrel.