By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Germany's DAX 30 benchmark closed at a
record and a broad Europe benchmark ended at the highest level in
more than five years Thursday as investors got their first chance
to react to the Federal Reserve's surprise decision to leave bond
purchases unchanged.
"The market is taking the view that ongoing liquidity pumped
into the system is a good thing for the financial systems," said
Will James, manager of the Standard Life Investments European
Equity Income Fund.
"But I'd be surprised if we continue to see those gains. I think
there's got to be a degree of reflection about what this really
means...It's because the Fed doesn't think the economy is strong
enough," he added.
The Stoxx Europe 600 index gained 0.6% to close at 315.05, while
Germany's DAX 30 index added 0.7% to 8,694.18, marking a record
close.
The U.K.'s FTSE 100 index added 1% to 6,625.39 and France's CAC
40 index climbed 0.9% to 4,206.04.
U.S. stocks traded mostly lower after closing at record highs on
Wednesday.
The solid gains in Europe came after the U.S. Fed late Wednesday
decided against reducing its $85-billion-a-month asset purchases
and said it would wait for more evidence of economic progress. The
central bank cited rising mortgage rates and reduced federal
spending as headwinds that "could slow the pace of improvement in
the economy." European markets were closed when the Fed made its
announcement, but most had expected a cut of about $10 billion a
month in the bond purchases.
Fed Chairman Ben Bernanke said that the central bank might still
scale back its bond buys before the end of the year, but that it
will depend on whether growth and the pace of hiring show greater
strength.
Movers
The decision against a September taper also boosted gold and
silver prices, triggering a rally for Europe's precious miners.
Polymetal International PLC surged 7.9%, Randgold Resources Ltd.
jumped 8.1% and Fresnillo PLC gained 6.1%.
"A number of stocks that either have a commodity, an emerging
markets or a growth angle to them are bouncing today. They have
been under pressure lately on worries about [Fed] tapering and the
impact it would have on those end markets," James from Standard
Life said.
Other than the mining firms, he also mentioned Nestle SA , up
1.2%, and Unilever PLC (UL), up 3.3%, as companies with notable
exposure to emerging markets.
Banks also gained, with Intesa Sanpaolo SpA up 3.7% in Milan,
Standard Chartered PLC climbing 3.3% in London and Deutsche Bank AG
(DB) ticking 1.5% higher in Frankfurt.
Among other notable movers in Europe on Thursday, shares of
Roche Holding AG gained 0.8%. A report in Dealreporter said the
Swiss drug maker was eyeing a takeover of U.S.-listed BioMarin
Pharmaceutical Inc. (BMRN). A representative from Roche declined to
comment on the report, while BioMarin wasn't immediately available
for comments.
Also in Zurich, shares of Cie. Financière Richemont SA rose 2.1%
and Swatch Group AG picked up 1.7% after data showed Swiss watch
exports rose 0.5% in August.
Shares of Scania AB climbed 2.8% after the Swedish truck maker
said it didn't see the normal seasonal downturn in European order
bookings in July and August.
Shares of Airbus-parent European Aeronautic Defence & Space
Co. added 1.7% in Paris after Deutsche Lufthansa AG said it will
order 59 long-range jetliners from Airbus and Boeing Co. (BA).
Lufthansa shares were down 0.4%.
The broader markets shook off downbeat retail data from the
U.K., showing sales dropped 0.9% in August after a solid 1.1% rise
in July.
Meanwhile, a monthly survey from the Confederation of British
Industry showed U.K. manufacturers are the most upbeat in 18
years.
The data calendar was heavy in the U.S.. Some 309,000 Americans
filed for jobless claims last week, which beat analysts
expectations. The Philadelphia Fed's manufacturing index jumped to
a reading of 22.3 in September from 9.3 in August, while the
leading economic index for the U.S. rose 0.7% in August to
96.6.
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