European stocks trim February and week’s decline and end green

European stocks finished modestly higher Friday, yet posting the fourth straight week in losses, looking ahead for U.S. Federal Reserve policy meeting next week.

The Stoxx Europe 600 index closed 1.5% lower on the week, with investors worrying a reduction in central liquidity will give financial markets a heavy blow.

Investors also looked to the U.S. to gauge if fresh data could strengthen or weaken the case for continued easing from the Fed, ahead of its policy-setting meeting next week.

 Investors have been scrutinizing economic data to determine whether growth is strong enough to prompt the Fed to scale back stimulus measures.

The data showed industrial production was unchanged in May, missing analyst expectations of a 0.1% gain. Meanwhile, the preliminary June reading of the University of Michigan and Thomson Reuters consumer-sentiment index fell to 82.7 from a final May reading of 84.5.

STOXX 600 ended higher today by 0.21% at 291.13; STOXX 50 ended also in green, higher by 0.21% at 2667.32.

CAC 40 Index  

The French benchmark index ended in the green today to settle at 3805.16, higher by 7.18 points or 0.19%. The index opened at 3822.64 recording a high of 3830.69 and a low of 3793.50. Within the index, 22 shares ended higher and 16 declined, and 2 were unchanged.

The best performers in terms of added value to the index were led by Cie General des Etablissements Michelin which climbed 4.68% to settle at €69.63. Following was Unibail-Rodamco SE which surged 2.70% to settle at €180.40, while coming in third was Vallourec SA which rose 2.49% to close at €39.515.

DAX Index  

German equities advanced today where the benchmark index DAX 30 ended higher by 32.57 points or 0.40% to close at 8127.96. The index opened at 8157.88 recording a high of 8188.00 and a low of 8111.38. Within the index, 20 ended higher and 9 ended lower and 1 was unchanged.

Driving the index higher by contributing the most to the index today were led by ThyssenKrupp AG that gained 3.04% to €14.915; following was by Lanxess AG as it added 2.48% to €54.64 and Continental AG which added 1.87% to €100.80.

FTSE 100 Index  

The British benchmark index ended the day higher to settle at 6308.26 with a gain of 3.63 points or 0.06%. The index opened the day at 6304.63 setting the high of 6343.51 and the low of 6290.62. Among the listed shares, 64 ended higher and 35 declined and 2 were unchanged.

Leading shares in terms of contribution today started with Glencore Xstrata Plc which surged 3.20% to close at £315.90; following was Kingfisher Plc which added 2.71% to end trading at £352.10 and Randgold Resources Ltd which added 2.56% to close at £4881.00.

The tightening of U.S. fiscal policy is “excessively rapid and ill-designed”, the International Monetary Fund said Friday and gave a negative assessment of the world’s largest economy.

Summing up its annual Article for consultation with the U.S., the International Monetary Fund forecast growth of just 1.9 per cent this year, followed by 2.7 per cent in 2014.

The IMF reckons growth would be as much as 1.75 percentage points higher if not for a rush to cut the government`s budget deficit.

Washington activated across-the-board federal government spending cuts, known as sequestration, in March because Congress could not agree on an alternative.

“The IMF’s advice is to slow down but hurry up: meaning slow the fiscal adjustment this year – which would help sustain growth and job creation – but hurry up with putting in place a medium-term road map to restore long-run fiscal sustainability,” said Christine Lagarde, the IMF’s managing director.

The IMF appealed for the U.S. to remove sequestration and replace it with a more balanced and gradual fiscal consolidation, but this decision would be far-fetched, as the U.S. public and markets is not seeing any direct and significant effect from the cuts.

 “The automatic spending cuts not only exert a heavy toll on growth in the short term, but the indiscriminate reductions in education, science, and infrastructure spending could also reduce medium-term potential growth,” said the IMF.

Also, the IMF said the U.S. should keep its bond purchases through to at least the end of this year, adding that the Federal Reserve was right to initiate quantitative easing.

However, the Fund warned of the risks of a long period of low rates and added that the Federal Reserve should keep preparing an exit from easy monetary policy.

“A long period of exceptionally low interest rates may entail potential unintended consequences for domestic financial stability and has complicated the macro-policy environment in some emerging markets,” the Fund said.

U.S. stocks were little changed on Friday’s open at the end of a volatile trading week, a day after the S&P 500 index had its best session since Jan. 2, as investors heed cautiousness on the Fed’s next move.

The major indexes pushed more than  1% higher Thursday , breaking a 3-day losing streak.

The Dow Jones Industrial Average rose 0.10% to 15190.75 points. The S&P 500 gained 0.25% to 1640.40 points. The NASDAQ composite index was flat at 3445.24 points. As of 10:12 a.m. ET

The choppy trading comes as investors readjust their expectations for the  Federal Reserve , which could begin to slow the pace of its bond buying program later this year. Fed chairman Ben Bernanke has said repeatedly that any decision to curtail monetary stimulus will depend on how the economy performs.

Investors have been scrutinizing economic data to determine whether growth is strong enough to prompt the Fed to scale back stimulus measures.

The Fed has a policy meeting next week and Bernanke will speak at a press conference Wednesday.

Economic Data

Economic data offered some support and stocks trimmed declines after a report showed producer prices rose more than expected in May as gasoline prices rebounded, and underlying inflation pressures remained muted.

The U.S. Bureau of Labor Statistics said producer prices increased 0.5% in May, driven largely by food and energy prices. The measure of prices for unfinished goods, excluding food and energy, fell 0.4%.

U.S. industrial production was unchanged in May as a drop in utility use offset gains in manufacturing and mining.

However, a surprising drop in consumer sentiment gave investors second thoughts on trading tone. The Michigan Consumer Sentiment Index dropped to 82.7 in its preliminary reading fro June from 84.5 the month before.

Movers

Groupon Inc.  jumped 7.7% after the daily-deal site drew an upgrade by Deutsche Bank AG.

Smith & Wesson Holding Corp. rose 5.8% after the gun manufacturer reported initial earnings above expectations.

Eli Lilly & Co. fell after halting a trial of an experimental Alzheimer’s drug.

Smithfield Foods Inc.’s shares held steady after the hog producer reported a steep drop in net profit.

Shares of Restoration Hardware jumped after the retailer reported results that easily beat forecasts. Shares of the company have been red hot since the retailer went public in November.