European markets and euro gain ground (AFP)

LONDON (AFP) – Europe's main stock markets and the euro edged higher on Tuesday, thanks partly to receding concerns over the impact of unrest in the Middle East and North Africa, analysts said.

London's FTSE 100 index of top shares rose 0.18 percent to 6,005.22 points nearing the half-way stage. The Paris CAC 40 added 0.27 percent to 4,122.89 points and Frankfurt's DAX 30 firmed 0.61 percent to 7,315.32 points.

The pan-European Stoxx 50 index of top eurozone companies was up 0.26 percent to 3,031.79.

"European bourses continued to reclaim lost ground on Tuesday with the FTSE 100, DAX and CAC all climbing in early trading, led chiefly by demand in heavyweight mining shares," said City Index analyst Joshua Raymond.

"Investor concerns regarding the crisis in the Middle East and North Africa seem to have abated of late, a fact helped no end by the stabilising of crude oil prices.

"Should crude prices continue to consolidate, this may open up potential for stronger equity moves as traders (review) valuations."

In foreign exchange deals on Thursday, the euro rose as high as $1.3855, compared with $1.3803 late in New York on Monday, as investors absorbed a series of economic data releases.

Eurozone inflation rose to 2.4 percent year-on-year in February from 2.3 percent in January, according to official EU estimates on Tuesday.

That rate was above the European Central Bank's medium-term inflation target of slightly below two percent across the 17-nation bloc.

Rising inflation pressures will likely overshadow an ECB monetary policy meeting on Thursday.

But "as the rise in inflation so far has been driven largely by higher energy prices, it still looks premature for the ECB to move to an outright shift in its statement regarding inflation risks at Thursday's meeting," said HSBC economist Janet Henry.

Rising inflation has fanned speculation that the ECB could advance a rate hike that many currently expect early in the third quarter of this year.

At the same time, the European Commission raised its eurozone 2011 growth forecast to 1.6 percent on Tuesday but warned that markets remain fragile and unrest in the Arab world threatens to drive up inflation.

The European Union's executive arm, which last November had forecast 2011 growth of 1.5 percent, said the improved outlook was supported by "better prospects for the global economy and upbeat EU business sentiment."

But the recovery is expected to remain uneven among the 17 nations that share the euro, with the export-driven German economy leading the pack while debt-stricken southern countries lag behind as they slash spending.

In Asian trade earlier Tuesday, markets were also higher with Tokyo performing strongly after a rally on Wall Street and as oil prices stabilised.

Tokyo rose 1.22 percent as exporter stocks were boosted by a weaker yen -- a result of dealers moving out of the safe-haven Japanese currency amid renewed risk appetite.

Hong Kong rose 0.25 percent while Shanghai gained 0.47 percent after a top official suggested inflation would fall in February, boosting hopes that further Chinese interest rate hikes in the near term can be avoided.

Sydney ended lower however after the Australian central bank said it would keep rates on hold at 4.75 percent.

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Calm returns to European markets ahead of weekend (AFP)

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Calm returns to European markets ahead of weekend (AFP)

LONDON (AFP) – European stock rose on Friday as some calm returned to global financial markets after a rocky week driven by Middle East fears while London resumed trading after a technical glitch closed the bourse for the morning.

In early afternoon deals, the Paris CAC 40 was up 1.21 percent to 4,058.22 points and Frankfurt's DAX 30 added 0.39 percent to 7,158.27 points.

London's FTSE 100 index of top shares rose 0.86 percent to 5,971.18 points, having reopened at 12H15 GMT following an outage which halted trading for more than four hours.

Markets suffered heavy losses earlier this week as investors flocked to the safe-haven Swiss franc and yen amid violent unrest in Libya that sent oil prices rocketing close to $120 per barrel.

"A little bit of calm descends on the markets," said research director Kathleen Brooks at online trading site Forex.com on Friday.

"After taking a battering this week, risky assets are getting a little respite today. Stocks are higher, the (Swiss franc) and yen are off their highs and the dollar ... is finding support."

In foreign exchange trade, the European single currency edged up to $1.3808 from $1.3797 late Thursday as traders also bet on rising interest rates to combat building inflationary pressures in the eurozone.

London's technical glitch, meanwhile, followed similar outages in both Milan and Paris earlier this week, and comes amid a fast-moving flow of company earnings and economic data against a backdrop of nerves over the unrest in Libya.

"At a time of uncertainty in the markets, where traders are having to keep on their toes with the situation in Libya, the last thing they need is an unexpected halt to trading," City Index analyst Joshua Raymond said.

Britain's economy shrank by a worse-than-expected 0.6 percent in the fourth quarter of 2010, official data showed on Friday, hit partly by the impact of harsh wintry weather.

"Gross domestic product (GDP) contracted by 0.6 percent in the fourth quarter of 2010, revised down from the previously estimated fall of 0.5 percent," the Office for National Statistics said in statement.

That marked the largest quarterly drop in GDP -- the total value of goods and services produced in the economy -- since the second quarter of 2009.

The sharp contraction followed expansion of 0.7 percent in the third quarter of last year. Market expectations had been for no change to the initial estimate.

On the corporate front, Britain's state-rescued bank Lloyds on Friday posted annual pre-tax profits of £2.2 billion (2.6 billion euros, $3.6 billion), recovering from a steep loss as it slashed bad debts.

International Airlines Group, formed last month via the merger of British Airways and Iberia, posted modest 2010 net profits, shrugging off the impact of strikes and severe weather conditions late in the year.

The results were calculated on a pro-forma basis as if British Airways and Iberia had already been trading as a combined group.

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European stocks fall as China tightens, traders eye G20 (AFP)

LONDON (AFP) – Europe's stock markets and the euro fell on Friday as investors reacted to fresh monetary tightening in China ahead of an eagerly-awaited Group of 20 finance meeting in Paris.

London's FTSE 100 index of top shares sank 0.48 percent to 6,058.08 points in late morning deals.

Frankfurt's DAX 30 dipped 0.12 percent to 7,396.24 points, the Paris CAC 40 retreated 0.18 percent to 4,144.93 and the Stoxx 50 index of top eurozone companies was off 0.26 percent to 3,056.55.

China's central bank announced Friday it would raise the amount of money banks must keep in reserve as it struggles to keep inflation under control in the world's second biggest economy.

The reserve requirement ratio will be raised by 50 basis points from February 24, the People's Bank of China (PBoC) said.

"China seems to be becoming increasingly concerned with its property market spiralling out of control as it applies the brake to bank lending yet again," ETX Capital trader Manoj Ladwa said.

The announcement from China, which has a voracious appetite for commodities, hit London's FTSE particularly hard because of its high gearing towards the mining and resources sector, according to Ladwa.

Shares in Anglo American dived 3.02 percent to 3,208.50 pence, despite news that net profits almost tripled to $6.54 billion (4.82 billion euros) last year, boosted by high commodity prices and emerging markets demand.

Earlier this week, the world's top miner BHP Billiton said its half-year net profits soared 72 percent to $10.52 billion while giant Rio Tinto said its annual net profits almost tripled to $14.32 billion.

However in Friday trade, BHP lost 3.30 percent to 2,402 pence and Rio Tinto shed 1.13 percent to 4,395 pence.

Meanwhile, in foreign exchange deals, the euro slid to $1.3554 as finance ministers gathered in Paris to hammer out common criteria for measuring global economic imbalances.

French President Nicolas Sarkozy has vowed to reform the world monetary system and commodities markets during his year at the G20 helm, saying he aims to defend poor economies from currency and trade turbulence.

"The G20 meeting ... is also expected to ratify the agreement earlier this week by (eurozone zone ministers) to double the EFSF bailout fund to 500 billion euros, though Germany will no doubt want some onerous strings attached," noted CMC Markets analyst Michael Hewson.

"Overshadowing all of this has been increased tensions across the Middle East," he added.

Financial markets were on edge this week after violent protests from Bahrain to Libya, with tensions also heightened by Iran's reported efforts to send naval ships into the Mediterranean.

Demonstrators in various Arab states have drawn inspiration from pro-democracy protests that led to the recent oustings of leaders in both Tunisia and Egypt.

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