The major markets across Europe are set to open higher on Thursday, following positive cues from Wall Street, where a late-day rally led by financials helped the major indices end in positive territory, after the Federal Reserve signaled that that the contraction in the economy is slowing down.
The Nasdaq ended the session up 1.08 points or 0.1% at 1,627, while the Dow jumped 109.44 points or 1.4% to 8,030 and the S&P 500 closed up 10.56 points or 1.3% at 852.
The Federal Reserve's Beige Book report showed that overall economic activity has contracted further or remained weak, although it said five of the twelve Fed districts noted a moderation in the pace of decline. The Labor Department said its consumer price index fell 0.1% in March following a 0.4% increase the month before. The decline came as a surprise to economists, who had expected prices to edge up 0.1%. Excluding food and energy prices, the core consumer price index rose 0.2% for the third consecutive month. Economists had been expecting a 0.1% increase in core prices.
Separately, the Fed's industrial production report showed that production fell 1.5% in March, while capacity utilization dropped to 69.3%. Economists expected industrial production to decline 0.9% in March, while capacity utilization was expected to come in at 69.6%.
The markets across the Asia-Pacific region, having opened strongly higher on positive cues from Wall Street, pared most of their gains following the release of China's GDP numbers, which showed that the economy expanded at a slower quarterly rate of 6.1% in the first quarter. Nevertheless, the markets ended in positive territory on expectations that the global recovery might take place earlier-than-expected.
Across Europe, the markets ended in negative territory on Wednesday, dragged down lby Switzerland's biggest bank, UBS AG, which reported a first quarter net loss of nearly 2 billion Swiss francs and said it will reduce its workforce by another 11%. The markets also digested the weak economic reports from the U.S.
The FTSEurofirst 300 index of pan-European blue chips closed 0.22% lower at 788 points, while the narrower DJ Stoxx 50 index fell 0.29% to 1,938 points. The U.K.'s FTSE 100 index dropped 0.52% to 3,968, while France's CAC 40 index slipped 0.48% to 2,986 and Germany's DAX index fell 0.16% to 4,550.
On the economic front, the Federal Statistical Office, or Destatis, in Germany reported that number of employees working in manufacturing units employing more than 50 people declined 0.3% year-over-year in February 2009. The number of hours worked during February 2009 also declined 11.1% year-over-year, the agency noted.
Market sentiment may also be influence by the euro zone consumer price inflation and industrial production reports to be released during the trading hours. According to analysts, annual inflation for March is forecast to match the initial estimate of 0.6%, which was the lowest level since the launch of euro ten years ago. Industrial production in the Euro area is predicted to plunge 18% annually in February versus a 17.3% decline in January.
In corporate news, Autonomy Corp. Plc (AU.L) said it has signed a license agreement with global life insurer to license company's solutions for compliance purposes.
The world's largest mobile phone maker Nokia is set to release first-quarter results. Earnings for the year-ago period were EUR 0.32 per share on net sales of EUR 12.7 billion.
Daimler AG (DAT) said it would acquire the stake of its commercial vehicles joint venture partner Hero Group, after the Indian company decided to pull out of the venture, citing declining economic conditions and the decision to grow its core business.
SABMiller Plc (SAB.L) said that he financial results of the group for the 12 months to 31 March 2009 remain in line with its expectations, despite of significant impact from unfavourable currency movements in the second half of the year.
Ashmore Group Plc (ASHM.L), in its interim management statement for the third quarter, said that assets under management fell 4% to US$23.5 billion as a result of net redemptions of US$1.2 billion. However, the long term prospects for the growth of the Local Currency theme remain extremely positive. The company stated that the underlying economies of many emerging markets countries remain relatively strong, despite being impacted by the problems of the developed world.
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