Europe close: Stocks higher as EU leaders reach budget deal

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LONDON (ShareCast) - - EU leaders reach budget deal
- Greece expects to lower deficit
- Banks may be forced to help set LIBOR and EURIBOR rates
- Spain unemployment level is its biggest problem, says EC Vice President

FTSE-100: 0.47%
Dax (Xetra: ^GDAXI - news) -30: 0.69%
Cac-40: 1.21%
FTSE Mibtel 30: 1.40%
Ibex 35: 1.93%
Stoxx 600: 1.16%

European stocks ended on a high note Friday after leaders of the 27-nation bloc reached a budget deal.

Policy makers agreed on the zone's long-term spending plans until the end of the decade at a summit in Brussels on Friday.

European Council President Herman Van Rompuy, who chaired the meeting, took to his Twitter account to proclaim "deal done", saying they had secured a budget "worth waiting for".

The deal came after 24 hours of talks. It fixes European Union (EU) spending over a seven-year period from 2014 to 2020 and sets a limit of € 960bn.

The budget demands of northern European countries including Britain and the Netherlands that wanted tighter spending, while keeping France and Poland happy with funding for farm subsidies and infrastructure.

The agreement will see the first net reduction to the EU's long-term budget in the bloc's history, representing a 3.0% drop on the last budget.

About €12bn euros was slashed from the last budget proposal made at a summit in November (Xetra: A0Z24E - news) .

Cross-border transport, energy and telecoms projects, took the biggest spending cuts with a reduction of more than €11bn.

EU officials' pay and perks were reduced by around €1.0bn, officials said.

The budget will now be sent to European Parliament for final approval, a process that could take several months with leading legislators already voicing opposition.

"The European Parliament will not accept this deficit budget if it is adopted in this way. That is certain," the parliament's president Martin Schulz said.

Greece expects to reduce deficit

Greece anticipates a lower budget deficit this year, according to the country's latest fiscal plan update for 2013-2016.

Athens expects the 2013 budget deficit to settle at 4.3% of gross domestic product (GDP) compared to the prior forecast of 5.5%, after taking into account the debt relief project agreed with international creditors last December.

Europe's top financial regulator Michel Barnier said in a statement Friday that he's considering forcing banks to participate in setting LIBOR and EURIBOR rates.

The move comes after lenders including Citigroup (NYSE: C - news) and HSBC Holdings (HKSE: 0005.HK - news) pulled out of some panels amid an interest rate rigging scandal.

European Commission Vice President Joaquin Almunia said Spain's high unemployment level is the country's biggest problem.

"I am concerned about Spain's situation, beginning with its unemployment. Spain is different from other European countries in that it has the largest unemployment rate in face of a recession and austerity measures," Almunia said in an interview for RNE.

BMW (Xetra: 519000 - news) soars on record sales

BMW surged 2.05% after the automaker posted record group sales in January, up 9.9% to 123,276 vehicles.

Aggreko (LSE: AGK.L - news) jumped 1.99% after HSBC (LSE: HSBA.L - news) upgraded the stock to 'neutral'. There was also speculation that the power generation company could be a bid target for ABB (NYSE: ABB - news) .

Imperial Tobacco (LSE: IMT.L - news) dropped 2.0% after Investec (LSE: INVP.L - news) downgraded the stock from 'buy' to 'hold'.

Sony (Xetra: 853687 - news) fell to the most since November 2008 after the consumer-electronics maker reported an eighth straight quarterly loss.

Euro/dollar edges lower

The euro/dollar plunged 0.19% to $1.3373.

Front month Brent crude futures rose 1.380 dollars to the 118.870 dollar level on the ICE.

RD