European stocks rise as rates on hold

European stock markets climbed but the euro slid against the dollar on Thursday as both the European Central Bank and the Bank of England held interest rates at record low levels. London's FTSE 100 index of top blue-chip companies closed up 0.92 percent to end at 6,681.98 points. Frankfurt's DAX 30 jumped 1.63 percent to 8,410.73 points, while the CAC 40 in Paris shot up 1.25 percent to 4,042.73 points. Madrid gained 1.27 percent and Milan soared 2.04 percent. Indices also won support from news that eurozone industry bounced back into growth mode in July, with the sector logging a two-year high and German manufacturers notably ending five months in the doldrums. The euro fell to $1.3223 from $1.3301 late in New York on Wednesday. Sterling dipped to $1.5153 from $1.5204 but was higher versus the European single currency. On the London Bullion Market, the price of gold edged up to $1,315 an ounce from $1,314.50 on Wednesday. ECB chief Mario Draghi repeated on Thursday a pledge that eurozone interest rates would remain low or could even fall further amid risks for the euro area. "Recent confidence indicators based on survey data have shown some further improvement from low levels and tentatively confirm the expectation of a stabilisation in economic activity," Draghi said. However, "the risks surrounding the economic outlook for the euro area continue to be on the downside," he warned at a news conference after the ECB held its interest rates at a record low of 0.5 percent as widely expected. Tomas Holinka, an economist at Moody's Analytics said that "signs that the euro area is emerging from recession have relaxed pressure on the ECB to cut rates." The outlook for continued low rates didn't help the euro, however. "While the euro initially rose on this morning's better-than- expected European PMI numbers it found its topside capped by ECB President Draghi's comments to keep policy accommodative for an extended period," said Michael Hewson, an analyst at CMC Markets UK. Markets were also analysing a batch of earnings from some of Europe's biggest companies. Shares in Societe Generale soared 10.4 percent to 33.35 euros after the French banking giant said that it more than doubled its net profits in the second quarter. But Sanofi slumped 4.1 percent to 76.85 euros as the French pharmaceutical group reported a plunge in second-quarter profit and lowered its year-end forecast. Energy giant GDF Suez reported a profits fall but held to its targets while saying it would pursue a rigorous review of its European assets, with its shares gaining 5.36 percent to 16.61 euros. In London, Lloyds Banking Group surged 8.1 percent to 74 pence after Britain's state-rescued lender announced a return to first-half net profits, boosting government hopes of returning it to the private sector. On the downside, Royal Dutch Shell 'A' shares shed 4.7 percent to 2.1 pence as the Anglo-Dutch energy group reported plunging net profits. Meanwhile in Frankfurt, BMW lost 0.79 percent to 73.01 euros despite the German top-of-the-range carmaker posting a higher-than-expected increase in second-quarter net profit. The company added that its revenue gain came in slightly below forecasts. Asian markets rose Thursday as investors welcomed the US Federal Reserve's decision to keep its stimulus scheme in place, with its view the economy was growing modestly soothing fears over the programme's future. Figures showing the world's number one economy grew more than forecast in the second quarter also provided support, while a better-than-expected official reading on Chinese manufacturing helped Hong Kong and Shanghai, traders said. US stocks were solidly higher on strong economic data from China, Europe and the United States. In midday trading, the Dow Jones Industrial Average was up 0.76 percent to 15,617.72 points. The broad-based S&P 500 climbed 1.06 percent to 1,703.68 points, while the tech-rich Nasdaq Composite Index increased 1.04 percent to 3,663.93 points. New claims for US unemployment insurance benefits fell more than expected last week to a five-year low, official data showed. Briefing.com analyst Patrick O'Hare said markets were reacting to a "battery of better-than-expected headlines."