European financial markets uneasy at close, watching for Fed

Milan gains slightly as markets watch U.S. federal reserve

European financial markets uneasy at close, watching for Fed

Milan, December 12 - Milan joined other European financial markets in showing modest gains Wednesday, as investors waited for word from the United States Federal Reserve on its future actions. The Fed's Open Market Committee did not conclude its regular two-day meeting, where a decision on further stimulus was expected, until after European markets closed. However, its decision to leave its key interest rates unchanged at between 0 and 0.25%, and a promise to keep rates "exceptionally low" until the unemployment rate drops below 6.5%, is likely to give markets a boost at Thursday's opening. The Fed also promised to continue efforts to revive the economy in the new year by continuing its monthly purchases of $85 billion in Treasury bonds and mortgage-backed securities. Such efforts to support the massive American economy will be seen as good news for global markets. In cautious anticipation, on the Milan Stock Exchange the FTSE Mib gained 1.14% to close at 15,764 points. And the spread between Italy's benchmark 10-year bond and its German counterpart closed lower Wednesday at 330 basis points, 10 points below Tuesday's close of 340 basis points. That suggests some stability in bond markets, where the spread indicates investor confidence in the outlook for the Italian economy. The yield on Italy's 10-year paper was 4.64%, down from the 4.72% that investors demanded one day earlier. The spread between 10-year Spanish bonds and those in Germany ended the day at 402 basis points, with a rate of 5.36% on Spanish 10-year paper. In other European markets, Frankfurt's DAX ended the day 0.33% higher at 7,614.79 points, while London's FTSE 100 also closed trading slightly higher by 0.35% at 5,945.85 points, Paris's CAC 40 was unchanged at 3,646.15 points and Spain's IBEX 35 ended the day 0.83% higher at 7,986.980 points.

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