- Yellen nominated as new Fed Chair
- Fed meeting minutes show close call on QE
- US government to compromise on debt ceiling
- BoE keeps monetary policy unchanged
- ECB and PBC make currency swap deal
FTSE 100: 1.07%
CAC 40: 1.56%
FTSE MIB: 1.88%
IBEX 35: 1.89%
Stoxx 600: 1.18%
Markets in Europe reacted positively to the nomination of Janet Yellen as new Federal Reserve Chair and to the US government's progress on debt ceiling negotiations.
President Barack Obama last night announced he was nominating Federal Reserve Vice-Chair Yellen to take over as the head of the central bank from Ben Bernanke next year.
Yellen, who has supported the Fed's stimulus programme, was a widely expected and favoured choice among investors.
At the same time the Fed released the minutes from last month's meeting which showed it was a close call in the central bank's decision to maintain its $85bn per month in bond purchases.
The Fed came close to announcing a tapering of quantitative easing but said there needs to be further signs of recovery in the US before taking action.
The central bank's decision last month to keep its monetary policy unchanged shocked economists who expected a tapering of between $10bn to $15bn. It is now not expected to announce a tapering until the end of the year, though the ongoing shutdown of the US government could mean that the taper will be pushed out into 2014.
On another bright note for markets, House Republican and Senate Democratic leaders are considering a short-term increase in the $16.7trn debt limit in order to stave off a possible default, according to reports.
Congress has until October 17th before reaching its borrowing limit and running out of cash to pay its bills.
The government is in the second week of a shutdown after failing to agree on a budget bill by last Monday's deadline. Lawmakers have continued to butt heads over the budget and raising the borrowing limit.
"Obama is scheduled to meet Republicans later today but the market is not too optimistic we will see lawmakers make any significant headway," according to Ishaq Siddiqi, Market Strategist at ETX Capital.
"Seems as if an 11th hour deal may now be the most likely scenario to be played out."
Bank of England, ECB
The Bank of England (BoE) has decided keep its monetary policy unchanged, as expected.
The Bank's Monetary Policy Committee held the interest rate at 0.5% and the asset purchase programme at £375bn.
The central bank has vowed to maintain the key rate at a record low until the unemployment rate falls from its current level of 7.7% to 7%.
The European Central Bank (EC), on the other hand, is expected to unveil new liquidity measures at its next policy announcement, according to economists.
Almost three in four of economists predict President Mario Draghi will reveal new liquidity measures such as longer-term refinancing operations, surveys by Bloomberg showed.
The majority of forecasters also say interest rates will remain unchanged through the first half of 2015.
Separately, the ECB and the People's Bank of China (PBC) have established a bilateral currency swap agreement "in the context of rapidly growing bilateral trade and investment between the euro area and China, as well as the need to ensure the stability of financial markets".
The swap agreement will be valid for three years and have a maximum size of 350bn yuan when yuan are provided to the ECB and €45bn when euros are provided to the PBC.
CGG advanced after the oilfield surveyor posted a 94% increase in third-quarter vessel production.
Tryg rallied after the Nordic property and casualty insurer reported third-quarter pre-tax profit of 907m kroner, compared to the forecast for 885m kroner.
Hays rose after the UK recruitment agency posted a 2% rise in first-quarter net fees compared to last year on a comparable basis.
Ladbrokes gained after an undisclosed buyer bought a stake in the UK bookmaker, The Telegraph reported.
Givaudan declined after the fragrance maker reported third-quarter sales that missed estimates.
Other asset classes climb
The euro rose 0.03% to the 1.3528 US dollar.
Brent crude futures jumped $0.818 to $109.960 per barrel on the ICE.