- Fed trims stimulus programme
- UK retail sales rise modestly
- EU agrees blueprint for failing banks
FTSE 100: 1.01%
CAC 40: 1.21%
FTSE MIB: 1.44%
IBEX 35: 1.75%
Stoxx 600: 1.42%
European stocks gained as investors weighed the Federal Reserve's decision to start scaling back monetary stimulus.
The US central last night announced it would reduce its monthly bond-buying programme from $85bn to $75bn and would make gradual further cuts depending on economic reports.
The Fed's move had been forecast by some following a batch of upbeat data.
"This should in turn remove much of the volatility that we have seen in the final quarter of 2013, gearing us up for a delayed but eagerly anticipated 'Santa Rally' to finish this year in a bang and kick off the next year in an upbeat fashion," said Market Strategist Ishaq Siddiqi from ETX Capital.
Policymakers predicted that the jobless rate - currently at 7% - would drop to around 6.5% by the end of 2014. However, they stressed that they would hold interest rates close to zero "well past the time that the unemployment rate declines below 6.5%, especially if projected inflation continues to run below the [FOMC's] 2% longer-run goal".
"The action today is intended to keep the level of accommodation the same overall and to push the economy forward," said Chairman Ben Bernanke. "We are committed to doing what is necessary to getting inflation back to target."
Moving to today's agenda in the US today is the release of initial jobless claims which are expected to be lower than last week's unexpected jump to 368,000, at around 334,000. Also out today is the release of existing home sales for November and the Philly Fed manufacturing index.
In the UK, retail sales rose by a modest 0.3% last month in line with consensus estimates, compared to October's 0.9% drop.
EU agrees deal for failing banks
Eurozone finance minsters this morning agreed a blueprint to close failing banks. However, they held back on a plan for the Eurozone to unit in tackling its struggling lenders.
The deal aims to prevent a repeat of the turmoil when failing banks in countries from Ireland to Cyprus brought their states to the brink of bankruptcy.
European leaders will sign off on the deal and the final details will be made in negotiations with the European Parliament next year.
Mediaset rallied after Deutsche Bank AG said that the Italian broadcaster's plan to spin off its pay-TV business could increase the company's profitability.
Amadeus advanced after the Spanish travel-reservations company forecast 2013 revenues and earnings that beat analysts' estimates.
Saab gained after the Swedish maker of Gripen jets beat Boeing Co. and Dassault Aviation SA to win the contract to supply 36 jet fighters to Brazil.
AstraZeneca edged higher after spending up to $4.1bn to buy Bristol-Myers Squibb's stake in their diabetes joint venture, giving the British company full ownership of intellectual property and global rights for a large portfolio of products.
Algeta surged after Bayer AG said it will buy the drugmaker for about 17.6bn kroner, a price that topped a preliminary offer.
The euro held at $ 1.3685.
Brent crude futures fell $0.119 to $109.500 per barrel on the ICE.