Europe Shares Close Mixed; Swiss Stocks Soar
European shares finished mixed Thursday, while the Swiss SMI index soared over 2 percent after being closed in the previous session, catching up on gains following the U.S. "fiscal cliff" deal.
The FTSEurofirst 300 Index of top European shares provisionally rose 0.4 percent to close at 1,162.24 points.
While Switzerland's SMI index surged 2.9 percent, and UK's FTSE 100 added 0.3 percent, most other regional indexes pulled back slightly after a U.S. budget deal had fueled strong gains in the previous session. Shares in UBS, Swatch Group, Transocean, Richemont,ABB and Holcim all pushed higher making up for lost time.
That bout of profit-taking was capped after data showed U.S. private-sector employers added 215,000 jobs in December, well above economists' expectations, a day before all-important payrolls figures for December, but it failed to spark a sustained broad-market rally.
"It basically means two scenarios for tomorrow: a strong figure and indexes hit new highs, or a sluggish figure which would trigger a pull-back. A lot of investors are looking for a reason to book profits at this point," Saxo Banque senior sales trader Alexandre Baradez said.
European shares saw some of the strongest gains in 18 months on Wednesday after the U.S. House of Representatives voted through a Senate-backed bill to avert the combination of pending cuts and tax hikes. On Thursday, however, most European markets showed more caution as growing uncertainty over how the U.S. will tackle further budgetary battles, with a $16.4 trillion debt ceiling looming in February.
A spokesman from the International Monetary Fund (IMF) welcomed lawmakers' action, but warned that "more remains to be done."
Meanwhile, Jason Hughes, head of Premium Client Management at IG Markets warned investors that future fiscal talks won't be the only headwind coming from the U.S. "There is also the small matter of what higher taxes will do to U.S. economic growth this year which is expected to come in at about 2 percent again," he said in a note on Thursday.
In Europe, Portugal's President Anibal Cavaco Silva has sent the country's 2013 budget to its highest court for a review after previously signing the budget into effect. In a televised address on Tuesday, the president said he had doubts about the budget's "distribution of sacrifices" and added later that he is unsure whether salary cuts for workers and pensioners, outlined in the budget, are constitutional.
"In Europe this morning German employment figures are expected to take center stage," Markus Huber, a trader at ETC Capital said in a morning note.
"With the unemployment rate expected to remain near a twenty year low despite rather sluggish growth during the second half of 2012, with many expecting that in the months ahead the picture might change as German companies starting to reduce their workforce if growth doesn't start to accelerate soon."
In the U.K., December's construction PMI figures showed a contraction to 48.7, the lowest reading since June 2012. A credit conditions survey from the Bank of England signaled better news with a large perceived improvement in credit availability for U.K. households for the fourth quarter of 2012. Mortgage lender Nationwide said on Thursday that U.K. house prices had fallen by 0.1 percent in December and that prices will remain flat in 2013.
In Spain, the labor ministry released figures showing the number of people out of work in the country fell by 1.2 percent in December from the previous month.
In stocks news, retailer Next released a fourth quarter Christmas trading statement on Thursday and raised its full year profit forecasts; shares in the U.K. firm were higher by 3.15 percent.
Struggling Spanish bank Bankia showed the biggest gains after shares were under pressure over the last few weeks. Investors have said that court action may be used to claw back losses made but the shares on Thursday regained some of the losses and rose by 7.36 percent.
Shares in Royal Dutch Shell showed little reaction on Thursday to news that a runaway oil rig that ran aground in Alaska on New Year's Eve was still aground on Sitkalidak Island, but "upright and stable".