European close: Bourses pick up as rates stay steady

LONDON (ShareCast) - European shares rallied late in the day after the European Central Bank kept its key lending rate unchanged and US market opened strongly.

The Dax closed up 36 at 5,481, while the CAC-40 in Paris added 38 to 3,709. As expected, the ECB kept interest rates steady at 1%, but has started preparations to pull back its stimulus packages by indicating it won't offer commercial banks 12-month loans next year.

"Not all our liquidity measures will be needed to the same extent as in the past" as the economy recovers, ECB President Jean-Claude Trichet said.

Markets don't expect the ECB to prolong its offer of 12-month money beyond December and Trichet said he would "say nothing to dispel this present sentiment."

Elsewhere, the Bank of England has voted to pump an additional £25bn into the economy, taking its quantitative easing programme (QE) to £200bn.

It expects to spend the extra money in three months and will keep the scale of the programme under review. QE started at £75bn in March, rose to £125bn in May then to £175bn three months later.

The US Federal Reserve also kept interest rates at close to zero yesterday, with the Fed indicating that rates will remain low for some time as the economy is still weak.

Anglo-Dutch food and household goods giant Unilever (LSE: ULVR.L - news) saw third quarter pre-tax profits drop by 43%, but volume growth of 3.6% came in better than expected. Pre-tax profits dropped to €1.42bn in the three month ended September compared with €2.50bn last year. Turnover was down 2% at €10.20bn.

Deutsche Telekom (Xetra: 555750 - news) reported a better-than-expected 7.2% rise in third quarter net profit to €959m and confirmed its 2009 targets.

Swiss bank UBS (Virt-X: UBSN.VX - news) has been fined £8m by the FSA for systems and controls failures that enabled four employees to carry out unauthorised transactions involving customer money on at least 39 accounts.

BNP Paribas (Paris: FR0000131104 - news) rose 3.3% as the French bank reported a 45% rise in third-quarter net profit to €1.31bn as the worst of the credit crunch passes.

Angry workers at Opel factories across Germany have walked out after General Motors (NYSE: GM - news) said it will cut some 10,000 jobs as part of the planned restructuring of its European arm. The US car giant said Wednesday night that jobs will have to go after its surprise decision to abandon the sale of Opel and Vauxhall. John Smith, GM's group vice president, said a new business plan would be put before European governments 'very shortly'.

CAC 40 (Paris: news) - Risers Michelin (Paris: FR0000121261 - news) (ML) € 52.77 +3.53% Carrefour (CA) € 31.17 +3.52% Schneider Electric (Paris: FR0000121972 - news) (SU) € 74.05 +3.45% BNP Paribas (BNP) € 54.36 +3.29% Bouygues (EN) € 34.97 +3.02%

CAC 40 - Fallers Cap Gemini (Paris: FR0000125338 - news) (CAP) € 30.97 -4.68% Lagardere SCA (MMB) € 30.95 -3.04% Dexia (DEXB) € 5.25 -2.51% Alcatel (Paris: FR0000130007 - news) -Lucent (ALU) € 2.60 -1.96% Suez Environnement Company (SEV) € 15.05 -0.46%