Europe Closes Higher, Get US Housing Data Boost
European stocks closed higher Monday after quite firm U.S. housing data, a day before a Federal Reserve meeting to decide on interest rates.
Pending sales of existing U.S. homes rose modestly in October but plunged from a year ago and demand should remain flat next year, National Association of Realtors data showed.
Many in the market had been looking for a 50 basis points cut from the Fed but those hopes were trimmed down by a better than expected jobs report on Friday.
European indexes had been largely flat in the afternoon, following a mid-morning boost after UBS reassured investors with details on a fresh cash injection and the extent of its subprime writedowns.
UBS shares jumped about 4 percent to finish 1.4 percent higher as the Swiss banking giant said the Singaporean government and an undisclosed Middle Eastern investor would stump up $11.5 billion, as it announced writedowns of $10 billion.
Some analysts said the shares' rise may be temporary, as more uncertainty was ahead.
"Of course the capital injection helps. But the recovery of the shares was also on the back of short-covering," Edith Thouin from ANB Amro Private Banking told "European Closing Bell."
"There are still a lot of doubts about the quality of UBS's portfolio," Thouin added.
Also in merger and acquisition news, Lafarge shares jumped 13.1 percent after the French cement maker said it had agreed to buy Egyptian rivalOrascomCement for $12.90.
Meanwhile the future of Rio Tinto remained uncertain as private-equity group Blackstone planned a counterbid for the London-listed miner, U.K. paper Telegraph newspaper said on Monday. Shares of Rio gained 0.7 percent on the news.