Small gains in Milan, other European financial markets mixed

Investors concerned over outlook for U.S. fiscal cliff

Small gains in Milan, other European financial markets mixed

Milan, December 27 - Milan showed small gains Thursday while other European financial markets held their ground despite fears over the outlook for the United States. On the Milan Stock Exchange, the FTSE Mib gained 0.45% to close at 16, 408 points. Trading was light on many financial markets due to the holiday season, but investors seemed nervous that politicians in the U.S. may not find the necessary compromise to avoid the so-called "fiscal cliff" of billions of dollars in austerity measures due to kick in at year-end. Harry Reid, Democratic party leader in the U.S. Senate, said that it seems his country is heading towards the fiscal cliff, which would trigger recession. "It looks like that's where we're headed", Reid said on the Senate floor Thursday. That gloomy assessment of the failure of bipartisan negotiations triggered a sell-off on stock markets in the U.S. Italian investors were rattled by a study released Thursday that suggested continued recession in 2013. The country's gross domestic product won't do quite as badly next year as in this year, but GDP will slide by about 1% in 2013 compared with an average loss of 2.1% in 2012, said Intesa Sanpaolo. Meanwhile, the spread between Italy's benchmark 10-year bond and its ultra-safe German counterpart closed higher at 321 basis points. The yield on Italian ten-year bonds was 4.52%. In other European markets, Frankfurt's DAX closed up by 0.26% to reach 7,655.88 points, while London's FTSE 100 closed trading lower by only 0.02% at 5,953.07 points, Paris's CAC 40 gained 0.6% to close at 3,674.26 points, and Spain's IBEX 35 ended the day 0.22% lower at 8,281 points.

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