- US budget deal unveiled
- Fed policy meeting looms
- German inflation holds steady
- ECB's Notwotny says monetary policy limited
FTSE 100: 0.24%
CAC 40: 0.67%
FTSE MIB: -0.21%
IBEX 35: 0.40%
Stoxx 600: 0.24%
European stocks were mixed after the US unveiled a budget deal and investors weighed the outlook for the Federal Reserve's stimulus programme.
US lawmakers last night reached a deal on the budget before the December 13th deadline.
House Budget Committee Chairman Paul Ryan said the deal will ease spending cuts for the next two years, which removes the threat of a government shutdown next month.
The budget agreement still needs to be passed in both the Senate and the House.
"The deal, struck between negotiators from the House and the Senate, doesn't appear to particularly favour either side and is going to draw criticism from members of both parties," said Alpari UK analyst Craig Erlam.
"However, it is an important first step in ensuring that we don't go through another shutdown, similar to October, that saw the popularity of both major parties drop significantly and almost 800,000 workers sent home without pay."
The deal removes uncertainty that could have otherwise weighed on recovery and supports the argument for a reduction to the Fed's monthly $85bn bond buying programme.
The Federal Open Market Committee (FOMC) meets on December 17th-18th, when some economists predict the central bank will announce a small tapering.
Germany's inflation rose by 1.3% in November, the same rate of growth as the previous month and in line with analysts' expectations.
The low rate of inflation was driven by falling prices of mineral oil products, which dropped 6.5%.
Elsewhere in the Eurozone, European Central Bank Governing Council member Ewald Nowotny said there are limits as to what monetary policy can still do to stimulate demand for credit to fund investments.
"Credit availability is not a problem now but what we see is that demand is very low," Nowotny, Governor of the Austrian Central Bank, told a news conference on Austrian bank stability today.
"The possibilities of monetary policy are more or less limited. It is the demand side that decides investments."
Natxis gained after Exane BNP Paribas SA raised its rating on the stock to 'outperform' from 'neutral'
The Royal Bank of Scotland slumped after confirming Finance Director Nathan Bostock will resign -less than 10 weeks after joining the board - to join Santander UK.
First Group edged higher after the UK rail company opposed a shareholder plan to split the company.
Imagination Technologies dropped after posting half-year sales that missed analysts' estimates.
The euro rose 0.01% to $1.3763.
Brent crude futures fell $0.487 to $108.850 per barrel, according to the ICE.