By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- Stocks in Europe extended gains Tuesday
after a key report showed inflation in the eurozone falling to a
multiyear low.
Underscoring persistently low inflation in the region, Eurostat
said consumer prices in September were 0.3% higher than in
September of last year, marking the lowest annual rate of inflation
since October 2009.
The data may put more pressure on the European Central Bank to
launch full-scale quantitative easing. The ECB, which meets
Thursday, has already enacted a series of measures aimed at
stimulating economic growth and inflation, but inflation remains
well below the bank's goal of just under 2%.
Most analysts say the bank, led by President Mario Draghi, on
Thursday will, however, likely focus more on details of its
"private" QE program, which includes purchases of asset-backed
securities and covered bonds. The Financial Times late Tuesday
reported Draghi will push for the central bank to accept loans from
Greek and Cypriot banks that carry so-called junk ratings.
Investors sifted through a mixed round of data on Tuesday.
German unemployment in September rose unexpectedly, indicating
softening in the labor market in Europe's largest economy. From
France, consumer spending rose in August, a rebound from July, but
a decline in producer prices in August accelerated to a rate of
0.3%.
In Italy, the unemployment rate fell to 12.3% in August from
12.6% in July, but the rate of youth unemployment climbed to a
record high.
Markets: The Stoxx Europe 600 rose 0.6% to 343.08, bumping up
from a 0.2% gain ahead of the inflation report. The index rose 0.3%
in September and increased by 0.4% for the third quarter, marking
the fifth straight month of gains.
The euro (EURUSD) fell to two-year lows against the dollar,
buying $1.2621 compared with $1.2694 late Monday in New York. The
euro suffered a quarterly loss of roughly 7.8% against the
greenback, the worst monthly performance since June 2010.
Also after the euro inflation report, Germany's DAX 30 rose 0.6%
to 9,474.30, and France's CAC 40 gained 1.3% to 4,416.24. Italy's
FTSE MIB surged 1.8% to 20,892.11.
Among session advancers, shares of Royal Bank of Scotland rose
1.5% after the bank said losses from bad loans in 2014 are likely
to be "significantly lower" than the GBP1 billion ($1.6 billion)
that it had anticipated.
The U.K.'s FTSE 100 finished 0.4% lower at 6,622.72, with a
profit warning from retailer Next PLC weighing on its shares.
A report from Office for National Statistics said the U.K.
economy expanded 0.9% in the second quarter compared with the
first, higher than a previous estimate of 0.8% growth
quarter-on-quarter.
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