-Europe's economies shrink at fastest rate in almost four years
-EU and US set a deadline for trade deal talks
-Fitch notes improvement in financing conditions for Eurozone sovereigns


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European equities moved into the red at close of business Thursday as new data revealed the bloc's recession deepened more than economists forecast in the last three months of 2012.

The Eurozone shrank to its fastest rate in almost four years, with a 0.6% quarter-on-quarter drop, according to the European Union's statistics office in Luxembourg.

It is the worst performance since the first quarter of 2009 in the aftermath of the collapse of Lehman Brothers Holdings Inc. The results exceeded the consensus forecasts of a 0.4% contraction in gross domestic product (GDP).

Europe's two largest economies German and France saw output shrink as GDP contracted 0.6% and 0.3% respectively compared to the previous quarter.

A sharp drop in net exports and investment in plants and machinery were blamed for Germany's decline.

Italy's economy fell 0.9% - its sixth consecutive drop and more than was forecast.

In an effort to boost its economies, the EU and US have set a deadline to complete talks on a new trade agreement within two years.

Leaders hope to revive growth and create jobs, while building a stronger relationship in the face of competition from China and other emerging markets.

José Manuel Barroso, European Commission President, said: "Together, we will form the largest trade zone in the world [...] It is a boost to our economies that does not cost a cent of taxpayer money."

President Barack Obama also backed the trade pact during his State of the Union address on Tuesday night.

Fitch notes key credit drivers for 2013

Fitch Ratings has noted an improvement in financing conditions for Eurozone sovereigns.

In its conference Thursday morning on key credit drivers for 2013, Fitch explained that the improvement in credit conditions registered last year was due to factors including: US recovery, the easing of the Eurozone financial crisis, improvements in bank funding, a robust corporate sector while also pointing out that the securitisation recovery is also gaining momentum.

However, the agency said there were still risks this year that will keep sovereign ratings under pressure. It pointed out that seven of the 10 largest economies in their coverage universe have a negative perspective.

Fitch expects the global economy to remain weak and said even emerging markets have begun to be affected by the slowdown in the advanced economies.

"Eurozone troubles continue to dominate the the sovereign rating outlooks", even though the agency noted that there are "tentative signs" of a recovery.

Rio Tinto falls on first ever annual loss

Rio Tinto fell 0.44% after the mining giant posting its first ever annual net loss Thursday of $2.9bn.

Rolls Royce rose 3.50% after the British aerospace company reported a 24% jump to £1.4bn in full-year profits driven by strong performance in its civil aerospace unit.

AMEC plunged 7.74% as the engineering and project management group provided a cautious outlook for 2013 alongside its 2012 results.

Bumi plc tumbled 11.13% as the company's founders Bakrie Group and financier Nathanial Rothschild continued to butt heads over the fate of the business ahead of a shareholder meeting next week.

Renault advanced 7.9% after France's second-largest carmaker said earnings before interest, taxes and one-time items totalled €729m, beating forecasts.

Other asset classes trading mixed

The euro/dollar dropped by 0.90% to $1.3331.

Front month Brent crude futures recovered from a midday slump, up by 0.025 dollars to the 117.910 dollar level on the ICE.

RD

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