European Stocks Close Higher, Uncertainties Remain
European stocks closed higher on Wednesday, but uncertainty about the strength of the global economy still lingered and a series of political surprises caught investors off guard.
U.S. shares opened lower, despite a strong rally Tuesday, and Asian stocks were mixed with the Nikkei closing lower following the unexpected resignation of Japanese Prime Minister Shinzo Abe.
The London FTSE-100 and Paris CAC-40 were slightly higher, while the Frankfurt DAX squeezed into the green in the last minutes of trading. The FTSE CNBC Global 300 was up.
The telecommunications, household goods, utilities and oil and gas sectors were in the green, while the battered banking sector was in the red again after Tuesday's rebound.
The European Central Bank injected 75 million euros ($104 billion) in three-month funds in the money markets, 25 million euros more than in a previous operation last month, a sign that commercial banks still lack the confidence to lend each other longer-maturity funds.
And Bank of England governor Mervyn King stood firm against bailing out struggling banks, but hinted that interest rates had reached their peak, in a written testimony to a British Parliament committee.
Mixed Corporate News
In corporate news, Barclays Capitalcame to the rescue of another credit-turmoil victim as it bailed out the highly-leveraged investment fund Golden Key with a $1.5-billion (738-million-pound) lifeline, London newspaper the Times reported Wednesday citing unnamed sources. Shares of Barclays closed flat.
British broadcaster ITV unveiled its new strategy, saying it planned to double its content revenue by 2012 to 1.2 billion pounds ($2.4 billion). Shares of the company fell by 1.3%.
German drug maker Merck's stock jumped over 2% on the back of the release Tuesday of good trial results of its cancer drug Erbitux.
And shares in U.K. company BAE Systems closed more than 3% up after reports that it was in exclusive talks with the U.S. Department of Defense about supplying 10,000 medium-weight military trucks.
In political news, Russian President Vladimir Putin dismissed his long-serving Prime Minister and nominated little-known Cabinet official Victor Zubkov to replace him.
The surprise move could put Zubkov in the running to replace Putin in presidential elections next year.
However, some analysts say Putin may have nominated Zubkov to keep a shroud of mystery over his choice of successor. Former Defense Minister Sergei Ivanov and gas giant Gazprom board chairman Dmitry Medvedev are widely considered to be the leading contenders.