European stocks steadier after Fed rally
LONDON (AFP) - Europe's stock markets rose on Friday following strong gains the previous day, as traders focused on the outlook for growth across the region.
London's benchmark FTSE 100 index ending the day up 0.33 percent at 6,606.58 points.
Frankfurt's DAX 30 rose 0.69 percent to 9,400.18 points and the CAC 40 in Paris added 0.40 percent to 4,193.77 points.
US stocks firmed on Wall Street on strong US output data.
"Today's price action has been predominantly geared to the upside with economic data still fairly positive as far as Germany, the UK and the US is concerned, while a downgrade of the EU's credit rating by S&P was largely shrugged off," said Michael Hewson, Chief Market Analyst at CMC Markets UK.
European indices had soared on Thursday after the US Federal Reserve boosted confidence in the economic recovery by announcing plans to scale back its vast stimulus programme.
Attention switched to Europe on Friday, with official data showing that Britain's economy expanded at 0.8 percent in the third quarter compared with output in the previous three months.
Gross domestic product grew by an upwardly-revised 1.9 percent in the third quarter or three months up to the end of September, compared with a year earlier, the Office for National Statistics said in a statement.
"The better-than-expected UK GDP for the third quarter, rising to 1.9 percent against the previous estimate of 1.5 percent, set the UK (FTSE) benchmark on a mission to see its first weekly gain since late October," said Brenda Kelly, senior market strategist at IG trading group.
Ratings downgrade 'questionable'
The Standard and Poor's ratings agency meanwhile downgraded the European Union's credit-worthiness by one notch, blaming threats to cohesion including Britain's role in curtailing budgets and holding a membership referendum.
But Brussels angrily slapped down the agency's decision to slash its long-term debt rating from "AAA" to "AA+", saying the grounds cited were "questionable".
"By contrast, S&P reaffirmed the UK's AAA rating as it expects higher growth and improving productivity -- a testament to the UK government's... spending restraint which is set to see public sector borrowing fall during 2014 and 2015," noted Ishaq Siddiqi, market strategist at ETX Capital traders.
"That said, the agency kept the outlook at negative, concerned that momentum of growth slows."
In foreign exchange trading, the European single currency rose at $1.3676 from $1.3661 late in New York on Thursday.
The euro rose to 83.63 pence from 83.44 pence. The British pound dropped to $1.6351 from $1.6371.
The Turkish lira fell to a record low level of 2.089 against the dollar compared to 2.071 on Thursday, prompting the central bank to threaten to ramp up sales of foreign currency.
The fall came against a background of internal political tensions, as well as the context of a tightening of US monetary policy and the risk that this could draw capital out of emerging markets.
Gold dipped to $1,195.25 an ounce from $1,196 Thursday on the London Bullion Market.
US stocks Friday opened higher after the Commerce Department said third-quarter gross domestic product grew much faster than previously estimated.
In midday trade, the Dow Jones Industrial Average rose 0.57 percent to 16,271.17 points.
The broad-based S&P 500 rose 0.62 percent to 1,820.84, while the tech-rich Nasdaq Composite Index increased 1.05 percent to 4,100.82.
Asian stock markets closed mixed on Friday and the dollar touched a new five-year high against the yen after the Federal Reserve said it would start to wind down its stimulus programme next month.
Global investors have broadly welcomed the Fed's decision Wednesday to reduce its bond-buying by a modest $10 billion a month to $75 billion while pledging to keep interest rates at record lows for the foreseeable future.
The move indicated the central bank is confident the world's number-one economy is becoming strong enough to stand on its own feet as it recovers from the financial crisis.
