- US debt ceiling deal hopes rise
- ECB to cut interest rates if market volatility resumes
- German inflation holds steady
- UK construction rises year-on-year
FTSE 100: 0.73%
CAC 40: -0.01%
FTSE MIB: 0.09%
IBEX 35: -0.26%
Stoxx 600: 0.33%
European stocks were little changed as investors weighed a possible US government deal to raise the debt ceiling and avoid a default.
Republicans yesterday offered to increase the government's borrowing limit to postpone a potential US default to November 22nd after a 90-minute meeting at the White House.
Congress must raise the $16.7trn borrowing limit by October 17th or it will run out of cash to pay its bills.
Markets appeared to breathe a sigh of relief on reports that an agreement could come on Friday.
"The implications for the next six weeks, however, are less positive, simply delaying the issue could lead to further volatility in the markets with both sides seemingly unwilling to budge up until this point, only the possibility of global economic Armageddon and the pressure of public opinion has forced the Republics to temporarily yield," according to Alex Conroy, Financial Sales Trader at Spreadex.
"The egregious failure of bi-partisan politics throughout this ordeal suggests this decision and apparent willingness to deal by the Republicans should be taken with a grain of salt."
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.
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.
Draghi, who said economic recovery remains subdued, uneven and fragile, had made the pledge in July to maintain official interest rates at or below current levels for "an extended period".
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.
In the UK, 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 38% to 456p as the UK postal service made its debut on the London Stock Exchange today.
Swedish Match declined after saying earnings at its US cigars and chewing tobacco unit will fall.
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.
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'.
French computer-services company Cap Gemini rallied after industry peer Infosys raised its sales forecast.
Euro/dollar edges higher
The euro rose 0.37% to the 1.3570 US dollar.
Brent crude futures fell $0.323 to $111.440 per barrel on the ICE.