By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- After spending most of the day mired in
the red, European stock markets moved higher in afternoon action on
Wednesday on hopes U.S. lawmakers will succeed in sealing a
last-minute fiscal deal.
"A deal is closing in the Senate and markets are rising on that.
But I just hope that markets aren't getting ahead of themselves,
because it's the House -- and not the Senate -- that has been the
issue and a deal needs to go through there as well," said Michael
Hewson, market analyst at CMC Markets.
"I don't know which way this will go, but there's an expectation
that this will get done, but no one really knows when or how a deal
will get done. It's difficult to make longer-term investment
decisions on the back of all this," he added.
The Stoxx Europe 600 index added 0.2% to 315.55, closing at the
highest level since June 2008.
Among notable movers in the index, shares of LVMH Moët Hennessy
Louis Vuitton SA (LVMHF) slid 4.3% after the luxury-goods firm late
Tuesday said sales at its core fashion and leather goods division
fell in the third quarter.
Some peer firms tracked LVMH lower, with shares of Christian
Dior SA down 3.8% and Cie. Financière Richemont SA off 1.5%.
Shares of Peugeot SA dropped 4.4% after data showed new
passenger car registrations for the brand fell 2.9% in September,
compared with the same month last year. Overall, new car
registrations in the European Union rose 5.4%.
U.S. fiscal progress
More broadly, investors tracked developments in the U.S., where
the government shutdown moved into Day 16 and the deadline for
lifting the nation's borrowing limit moved closer. Lawmakers were
racing to finalize a deal, with an agreement expected to be
announced when the Senate opens for business at noon Eastern Time.
The deal would finance the federal government until Jan. 15 and
raise the debt ceiling until Feb. 7.
Speaker John Boehner will allow a Senate agreement to come to
the House floor for a vote "in a very timely way," Texas Republican
Rep. Kevin Brady told Bloomberg Television.
Fitch Ratings put its AAA credit rating of the U.S. on negative
watch late Tuesday, citing the prolonged congressional negotiations
over a hike to the borrowing limit.
"Although Fitch continues to believe that the debt ceiling will
be raised soon, the political brinkmanship and reduced financing
flexibility could increase the risk of a U.S. default," the ratings
company said.
U.S. stocks closed lower on Tuesday, but rallied on Wednesday.
Asia markets closed mixed.
Europe movers
Back in Europe, Germany's DAX 30 index gained 0.5% to 8,846.00,
closing at the highest level on record.
France's CAC 40 index dropped 0.3% to 4,243.72, weighed by
Danone SA and LVMH Louis Vuitton.
Danone shares dropped 2.3% after the company -- known for its
Activia yogurt and Evian water -- cut its full-year targets as it
battles to restore consumer confidence in its baby-milk products in
Asia, following the recent Fonterra food-safety scare.
The U.K.'s FTSE 100 index added 0.3% to 6,571.59. Investors in
London digested the latest U.K. labor data, which showed the
unemployment rate in August held steady at 7.7%, although total
employment hit a record high.
Jobless claims fell in September, adding to signs the U.K. jobs
market is improving, but also fueling speculation that the Bank of
England's forecast for unemployment may be off. The central bank in
said in August it will keep interest rates at a record low until
the joblessness rate drops below 7%, which it judged unlikely to
happen before 2016.
"We expect unemployment to reach 7% by Q3 2015, sooner than
policy makers expect. Today's jobless claims data raise the risks
that unemployment could fall to the BOE's threshold sooner than we
expect, but recorded unemployment has not had a close relationship
with jobless claims recently," said Rob Wood, chief U.K. economist
at Berenberg, in a note.
Among notable movers in London, shares of IMI PLC added 1.9% on
news Marmon Group LLC, the industrial arm of Warren Buffett's
Berkshire Hathaway Inc. (BRK/A), has bought the drinks dispensing
and merchandising divisions of the British engineering company.
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