European Markets Rebounded On Commodity Gains & Earnings

(RTTNews) - The European markets rebounded from yesterday's pullback and ended Wednesday's session firmly in the green. A recovery in oil prices sparked gains in energy stocks, as well as mining and resource stocks. Automakers and banks also took part in the broad based rally. Meanwhile, utilities were under pressure after RWE suspended its dividend payment.

Energy stocks were in demand as crude oil prices climbed back to around the $30 a barrel level. The increase by the price of crude oil comes amid reports several oil ministers are meeting in Iran to discuss a possible production freeze.

Market expectations regarding the European Central Bank are sometimes unrealistic and there is a risk that they may again be too high ahead of the March policy decision, ECB policymaker Ewald Nowotny said in an interview published Wednesday.

Ahead of the December ECB rate session, market expectations were high, given the repeated affirmations from ECB President Mario Draghi and fellow Governing Council members since the October policy session that the bank was ready to do everything to bring euro area inflation to its target of 'below, but close to 2 percent.'

However, December's 10 basis points cut to the deposit rate and an extension of the asset purchase programme until at least March 2017 was less than expected, causing the ECB to take the blame for promising big, but delivering less.

"I fear the expectations might develop in this direction again," Nowotny, who heads the Austrian central bank, said in an interview to the Swiss website, Cash.ch

He termed the market expectations in December as "ludicrous" and said they were divorced from reality.

However, this was not the case this time and the ECB rate-setting body, the Governing Council, is having a relatively serious discussion, Nowotny said.

"There is still time until March," the policymaker noted.

The Euro Stoxx 50 index of eurozone bluechip stocks increased 2.71 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 2.28 percent.

The DAX of Germany climbed 2.65 percent and the CAC 40 of France rose 2.99 percent. The FTSE of the U.K. gained 2.71 percent, but the SMI of Switzerland finished higher by 1.69 percent.

In Frankfurt, RWE plunged 12.46 percent after the utility suspended dividend payment for fiscal 2015 on its common shares, citing write-downs and impairments on its German and British power stations. E.ON also fell 1.57 percent.

Volkswagen climbed 3.94 percent and Daimler added 4.14 percent. BMW also closed up by 3.52 percent.

Deutsche Bank rose 6.51 percent and Commerzbank gained 2.01 percent.

In Paris, Credit Agricole shares soared 13.75 percent. The lender has confirmed plans to simplify its ownership structure after posting higher profit in its fourth quarter.

Schneider Electric advanced 9.58 percent. The electric equipment maker raised its dividend and announced plans to extend its share buyback after reporting profit that beat analyst estimates.

Renault climbed 7.76 percent and Peugeot added 4.53 percent.

Technip rose 6.16 percent and Total finished higher by 1.47 percent.

In London, Glencore jumped 14.76 percent, as the mining and commodities giant said it has signed a new revolving credit facility to refinance and replace the existing $8.45 billion facility.

Anglo American increased 17.62 percent, after Credit Suisse raised its price target on the stock.

J Sainsbury gained 4.77 percent, after Exane BNP upgraded its rating on the stock to "Outperform" from "Neutral."

Tullow Oil leaped 10.38percent and BP added 3.69 percent. Royal Dutch Shell also finished higher by 4.79 percent.

Norsk Hydro climbed 12.40 percent in Oslo. The aluminum producer cut its 2016 forecast for aluminum global demand after reporting fourth-quarter net income of 541 million Norwegian kroner, due to the dollar's strength.

ABN Amro Group slipped 3.08 percent in Amsterdam, despite reporting a big jump in 2015 net profit.

Eurozone construction output decreased at the end of the year, after rising in the previous two months, figures from Eurostat showed Wednesday. Construction output fell a seasonally adjusted 0.6 percent month-over-month in December, reversing a 0.9 percent rise in November, which was revised up from a 0.8 percent gain reported earlier.

British households' finance outlook turned positive for the first time in three months in February, while their financial woes eased amid sustained low inflation, results of a survey by Markit Economics and financial information provider Ipsos Mori revealed Wednesday.

The seasonally adjusted Markit Household Finance Index, which measures overall perceptions of financial well being and aims to track consumer behavior, rose to 45.3 in February from 43.9 in the previous month. A score below 50 suggests pessimism regarding finances among the U.K. households. However, it was the highest reading in ten months.

New residential construction in the U.S. unexpectedly showed a notable decrease in the month of January, the Commerce Department revealed in a report released on Wednesday. The report said housing starts tumbled 3.8 percent to an annual rate of 1.099 million in January from the revised December estimate of 1.143 million.

The steep drop came as a surprise to economists, who had expected housing starts to climb to an annual rate of 1.175 million from the 1.149 million originally reported for the previous month.

The Commerce Department also said building permits, an indicator of future housing demand, edged down 0.2 percent to an annual rate of 1.202 million in January from 1.204 million in December. Economists had expected an annual rate of 1.224 million.

With higher prices for services offsetting a continued decrease in energy prices, the Labor Department released a report on Wednesday showing an unexpected uptick in U.S. producer prices in the month of January.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in January after edging down by 0.2 percent in December. Economists had expected another 0.2 percent drop in prices.

Industrial production in the U.S. increased by much more than anticipated in the month of January, according to a report released by the Federal Reserve on Wednesday, with the rebound reflecting a sharp jump in utilities output.

The Fed said industrial production climbed by 0.9 percent in January after falling by a revised 0.7 percent in December. Economists had expected production to rise by 0.4 percent compared to the 0.4 percent drop originally reported for the previous month.