European Markets Extended Gains Following Yesterday's Rally

(RTTNews) - The European markets ended Friday's session with modest gains, following the strong rally during the prior trading session. Thursday's gains were attributed to dovish comments from Janet Yellen, the nominee to become the new Chairman of the Federal Reserve. Yellen defended the Fed's ultra-easy monetary policy and warned that unemployment remains too high for the Fed to consider significantly scaling back its $85 billion a month in asset purchases.

Spain and Ireland are set for clean exits from their rescue programmes as the stringent and structural reforms initiated by the governments finally pay off.

The strong commitment towards the implementation of bailout conditions has shown results, Jeroen Dijsselbloem, who presided the Eurogoup meeting said late Thursday. "Both economies are back on the road to recovery," he added.

The Spanish banking sector has improved significantly, including gaining of access to funding markets. The improvement in the regulatory and supervisory framework is expected to increase the resilience of the sector, Eurozone finance ministers said at the gathering in Brussels.

"We are fully supportive of Spain's decision not to request any successor ESM financial assistance following the programme exit in January 2014," Eurogroup said in a statement. But ministers called for continuous measures to address high unemployment and the vulnerabilities stemming from the still high private and external debt.

With the official exit of Spain and Ireland from the emergency funding, the remaining economies on life-support mechanism are Greece, Portugal and Cyprus. Despite the encouraging signs, more efforts are needed to bring an end to the European crisis and strengthen the monetary union, European Central Bank Executive Board member Yves Mersch said on Friday.

"We can clearly see that investor confidence is slowly returning, that the persistent euro area financial market fragmentation is decreasing and that contagion is receding," the policymaker said at an investment conference in London.

"This does not mean that the euro area and its member countries can rest on their laurels."

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.04 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.28 percent.

The DAX of Germany climbed by 0.21 percent and the CAC 40 of France advanced by 0.19 percent. The FTSE 100 of the U.K. rose by 0.41 percent and the SMI of Switzerland gained 0.27 percent.

In Frankfurt, MunichRe declined by 0.23 percent. Barclays downgraded the stock to ''Equalweight'' from ''Overweight.''

Barclays upgraded SAP to ''Overweight'' from ''Equalweight.'' The stock gained 1.67 percent.

In Paris, Vivendi increased by 2.77 percent, after reporting quarterly results.

Safran dropped by 3.86 percent, after the French government decided to sell a stake in the jet engine maker.

HSBC downgraded GDF Suez to ''Underweight'' from ''Neutral.'' The stock fell by 0.42 percent.

In London, RSA Insurance rose by 1.95 percent. The stock was downgraded to ''Hold'' from ''Buy'' at Berenberg.

Serco dipped by 0.12 percent, despite a broker upgrade.

Vedanta Resources dropped by 6.69 percent, after its first-half pre-tax profit plunged.

IAG decreased by 2.90 percent. The airline group said it is targeting a 1.8 billion euros operating profit in 2015.

Swedish apparel retailer Hennes & Mauritz AB reported growth in total sales and comparable units for the month of October. The stock finished higher by 1.78 percent in Stockholm.

Julius Baer declined by 1.55 percent in Zurich. The lender said its Assets under Management were 31 percent higher at the end of October, compared to the end of 2012, benefiting from a recent acquisition.

Dexia, which reported a narrower third-quarter loss and a reduction in balance sheet, is plunged by 20 percent in Brussels.

Eurozone inflation slowed to 0.7 percent in October, as initially estimated, from 1.1 percent in September, final data from Eurostat showed Friday. The rate was the lowest since November 2009. Moreover, it has remained below the European Central Bank's target of 'below, but close to 2 percent' for the ninth month in a row.

Confidence among British households regarding the value of their homes decreased moderately in November from an all-time high in the previous month, but overall sentiment remained high, survey data released by Markit Economics and Knight Frank showed Friday.

The Markit/Knight Frank House Price Sentiment Index (HPSI), which measures what households think will happen to the value of their property over the next year, dropped to 70.1 in November from 71.1 in October.

Conditions for New York manufacturers unexpectedly weakened in the month of November, according to a report released by the Federal Reserve Bank of New York on Friday, with the index of regional manufacturing activity turning negative for the first time since May.

The New York Fed said its general business conditions index fell to a negative 2.2 in November from a positive 1.5 in October, with a negative reading indicating a contraction in manufacturing activity. The negative reading for the general business conditions index came as a surprise to economists, who had expected the index to climb to 5.5.

With fuel prices showing a significant decrease, the Labor Department released a report on Friday showing that U.S. import prices fell by more than expected in the month of October.

The report said import prices fell by 0.7 percent in October after inching up by 0.1 percent in September. Economists had been expecting import prices to drop by about 0.5 percent.

Meanwhile, the Labor Department said exports prices dropped by 0.5 percent in October following a 0.4 percent increase in September. Export prices had been expected to edge up by 0.2 percent.

Industrial production in the U.S. unexpectedly saw a modest decrease in the month of October, the Federal Reserve revealed in a report on Friday. The report said industrial production edged down by 0.1 percent in October after climbing by an upwardly revised 0.7 percent in September.

Economists had been expecting production to inch up by 0.1 percent compared to the 0.6 percent increase originally reported for the previous month.

Wholesale inventories in the U.S. rose in line with economist estimates in the month of September, according to a report released by the Commerce Department on Friday. The report said wholesale inventories increased by 0.4 percent in September after climbing by an upwardly revised 0.8 percent in August. The increase in inventories matched economist estimates.