European stock markets closed slightly higher Wednesday despite signs that the European economy is weakening further. However indications that the Chinese economy is recovering from its weakest period of growth in three years, coupled with an expansion in US manufacturing, helped keep investor sentiment mildly positive.
Milan's FTSE MIB index was the best performer among the main European indexes, edging up 0.82%. Boosting the Milan bourse was news that blue-chip Finmeccanica SpA's Ansaldo unit won a 300-million-euro contract for an energy project in Algeria.
Also boosting investor sentiment in Milan were the announcement of a major cost-cutting program by computer chip maker STM as well as positive nine-month results reported by energy giant Saipem. Mediaset, the media company controlled by former premier Silvio Berlusconi, closed lower after reporting a major drop in its Spain unit's profits.
London's FTSE-100 index closed up 0.12%, Madrids Ibex35 gained 0.57% while Paris' CAC 40 and Frankfurt's DAX ended, respectively, 0.59% and 0.27% higher. Italian bond-interest rates dropped slightly from Tuesday's 4.87%, ending the day at 4.84%, while the spread between Italian bond rates and the German equivalent closed at 328 basis points, one lower than Tuesday.
The difference between interest rates on Spanish bonds and the German benchmark also dropped Wednesday, to close at 401, from Tuesday's close of 407.
Bond spreads are an important gauge of market confidence in Italy's and Spain's ability to pay down their large public debts.