European Markets Rallied On Greek Hopes & Ukraine Cease-Fire

(RTTNews) - The European markets finished solidly in positive territory Thursday. Investor sentiment received a boost from a cease-fire agreement in Ukraine and continued hopes for a Greek debt deal. A surprise interest rate cut in Sweden also contributed to the positive mood. All of the positives helped to overshadow some weaker than expected economic data from the United States. Eurozone finance ministers ended their talks on Wednesday without any major breakthrough on the future course of action on Greek debt funding.

"We had an intense discussion and constructive, covering a lot of ground, also making progress, but not enough progress at this point to come to joint conclusions," Eurogroup President Jeroen Dijsselbloem said at the press conference in Brussels late Wednesday.

"We will also continue our talks on Greece and our current and future cooperation with Greece," he said. "That is where we stand. So, there are no real conclusions, which I can share with you."

European Union leaders are set to meet in Brussels today. Eurozone finance ministers will gather again on February 16.

The warring parties in Eastern Ukraine have reached an agreement on a road-map to end the months-old fighting, with a ceasefire beginning February 15. Marathon peace talks in neighboring Belarus that began Wednesday, involving leaders of Russia, Ukraine, Germany and France, spilled over to Thursday.

After 16 hours of talks in the Belarusian capital of Minsk, Russian President Vladimir Putin told reporters that the truce will come into effect at 12 a.m. local time Sunday. The deal also involves a withdrawal of heavy weapons from the front line, which, according to Putin, is "extremely important."

Sweden's central bank cut its key interest rate unexpectedly to negative zone and launched a bond purchase programme, citing risks to inflation from an uncertain external environment, and also vowed to do more at short notice.

The Executive Board of the Riksbank decided to cut the repo rate by ten basis points to -0.10 percent. Previously, the bank lowered the rate by a quarter point to zero last October.

As the repo rate is close to its lower bound, Riksbank decided to buy government bonds to expand monetary policy further. The bank will 'soon' buy SEK 10 billion government bonds with maturities of 1-5 years.

The Bank of England expects inflation to breach the 2 percent target in three years and economic growth to gain momentum. Although inflation is set to turn negative in the near term, the bank signaled an early rate hike than investors anticipate.

In the quarterly Inflation Report, released Thursday, the bank expressed readiness to take whatever action needed to ensure that inflation returns to the 2 percent target in a timely fashion. Any interest rate hikes would still be more gradual and limited, it said.

The BoE expects robust pace of growth seen in 2014 to be sustained in the near term. Gross domestic product is estimated to rise by 2.9 percent in 2015 and 2016. For 2017, the bank estimated 2.7 percent expansion.

The bank left 2015 GDP outlook unchanged from the previous forecast, but upgraded the outlook for 2016 from 2.6 percent.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.20 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.24 percent.

The DAX of Germany climbed by 1.56 percent and the CAC 40 of France gained 1.00 percent. The FTSE of the U.K. rose by 0.15 percent and the SMI of Switzerland finished up by 0.39 percent.

In Frankfurt, Deutsche Bank rose by 3.00 percent, but peer Commerzbank, which reported financial results, fell by 0.71 percent.

In Paris, Societe Generale climbed by 1.64 percent, after it reported a surge in quarterly net income. Credit Agricole and BNP Paribas added 4.61 percent and 2.57 percent.

Renault jumped by 11.54 percent, after the car maker reported increased profit for the year.

Total gained 0.85 percent, after the company announced that it will sell $5 billion in assets this year. The company also plans to cut 180 jobs.

Meanwhile, Pernod-Ricard, which reported lower first-half profit, was 4.09 percent lower.

EDF dropped by 3.84 percent, after its full year 2014 profit fell short of expectations.

In London, Rio Tinto increased by 2.29 percent. The company reported increased annual profit, upped its dividend and announced a new buyback of shares.

Shire rose by 4.63 percent, after reporting better than expected results.

Burberry Group increased by 3.62 percent. RBC Capital Markets initiated coverage on the stock today with an "Outperform" rating.

Credit Suisse surged by 9.09 percent in Zurich. The lender reported a profit for the fourth quarter.

Eurozone industrial production remained flat in December after expanding for three consecutive months, data from Eurostat revealed Thursday.

Industrial production remained unchanged from November, while it was forecast to grow 0.2 percent. The growth rate for November was revised down to 0.1 percent from 0.2 percent.

Germany's consumer prices fell for the first time since September 2009 in January and at a faster than initially estimated pace, final data from Destatis showed Thursday.

The consumer price index dropped 0.4 percent in January from last year, while it was estimated to fall by 0.3 percent. This was the first drop since September 2009 and the biggest decline since July 2009, when prices slid 0.5 percent.

Continuing to rebound from a recent pullback, first-time claims for U.S. unemployment benefits unexpectedly climbed back above the 300,000 level in the week ended February 7th.

The Labor Department released a report on Thursday showing that initial jobless claims climbed to 304,000, an increase of 25,000 from the previous week's revised level of 279,000. Economists had expected jobless claims to rise to 288,000 from the 278,000 originally reported for the previous week.

With sales by gas stations showing another substantial decrease, the Commerce Department released a report on Thursday showing that U.S. retail sales fell by more than anticipated in the month of January. The report said retail sales fell by 0.8 percent in January after slumping by 0.9 percent in December. Economists had expected sales to drop by 0.5 percent.

Business inventories in the U.S. saw a modest increase in the month of December, according to a report released by the Commerce Department on Thursday, although the report also showed a notable decrease in business sales.

The report said business inventories inched up by 0.1 percent in December after edging up by 0.2 percent in November. Economists had been expecting another 0.2 percent increase.