Negative growth.

European Markets Held Gains After Central Bank Decisions


The central bank of 17 nations held the refinancing rate unchanged at 0.75 percent for a fifth successive month in December following the Governing Council meeting in Frankfurt on Thursday. The decision was in line with economists' expectations.

The European Central Bank on Thursday slashed the growth outlook for the 17-nation economy for this year and next, and unveiled its first projection for 2014 that showed a recovery in the currency-bloc.

The latest Eurosystem staff macroeconomic projections show annual real GDP growth in a range between -0.6 percent and -0.4 percent for 2012. This means the mid-point was lowered to -0.5 percent from -0.4 percent seen in September.

GDP growth is seen between -0.9 percent and 0.3 percent for 2013. This compares to -0.4 percent and 1.4 percent predicted three months ago. The economy is expected to recover in 2014 with GDP expansion seen between 0.2% and 2.2% that year.

The Bank of England kept the size of stimulus unchanged at the final policy meeting of the year even though the economic prospects dimmed and the government austerity is set to continue for a longer period.

The Monetary Policy Committee headed by Mervyn King today maintained its quantitative easing at GBP 375 billion. The central bank fully utilized the previous GBP 50 billion-increase initiated in July. The nine-member committee also left the interest rates unchanged at 0.50 percent, the lowest level since the bank was established in 1694. The rate has not been changed since early 2009.

European nations are unlikely to finalize a bank supervision framework this year, European Central Bank Executive Board member Jorg Asmussen reportedly said Wednesday. His remarks came a day after an attempt by European Union leaders to strike a deal on a single supervisor for euro area banks failed, largely due to rift between France and Germany.

"I think that we can establish the legal framework relatively quickly, but we are slipping automatically into next year," reports said quoting Asmussen, participating in a panel discussion.

Standard and Poor's on Wednesday lowered the credit rating on Greece to 'selective default' (SD) from 'CCC', days after the country announced a debt buyback plan to rid the country of its mounting debt.

S&P said the decision follows the Greek government's invitation to private sector bondholders on December 3 to participate in a series of debt buyback auctions. Under S&P's criteria, this move amounted to a 'selective default.'