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US indices finish at fresh records as ECB pauses rates again

The US economy expanded at a faster-than-expected annual rate of 3.3 percent in the fourth quarter (ANGELA WEISS)
The US economy expanded at a faster-than-expected annual rate of 3.3 percent in the fourth quarter (ANGELA WEISS)

Wall Street indices finished at fresh records Thursday on the back of strong US economic growth data while European stocks edged higher despite the European Central Bank signaling it was too soon to start considering interest rate cuts.

The world's biggest economy expanded at a faster-than-expected annual rate of 3.3 percent in the fourth quarter, boosted by a resilient jobs market and consumer spending, the Commerce Department said.

Major US indices forged higher after the data, with both the Dow and S&P 500 finishing at records.

"Markets are all about looking forward, and they have a good basis to be optimistic given the boost in confidence, manufacturing and housing data we've seen lately," said Callie Cox, US investment analyst at eToro.

The data raised hopes that the US economy is headed towards a "soft landing" -- meaning it could avoid a severe downturn despite interest rate hikes by the US Federal Reserve.

"A recession still isn't out of the question, and the Fed still has the economy in a vice. But as the days pass and data improves, it sure does look like the Fed is achieving a soft landing with minimal harm to the economy," Cox said.

Inflation has cooled in the United States and Europe, raising hopes that the Fed and ECB could soon start cutting interest rates that were hiked in efforts to tame consumer prices.

But the ECB held its rates steady on Thursday and indicated they would stay at those levels for a "sufficiently long duration" to "make a substantial contribution" to returning inflation to its two-percent target.

ECB chief Christine Lagarde said there was "consensus" at Thursday's meeting that it was "premature to discuss rate cuts."

CMC Markets analyst Michael Hewson noted that: "Despite this the possibility of a cut wasn't completely ruled out, which keeps the prospect of an earlier move on the table and has helped to drag European markets off their lows of the day, and back into the green."

Frankfurt and Paris ended the day up 0.1 percent.

Business surveys published Wednesday showed the eurozone economy continuing to contract in January, and data out Thursday found business morale in Germany sank further in January as the slump in Europe's largest economy showed few signs of passing quickly.

Leading tech stocks, including Microsoft, IBM and Google owner Alphabet, rose on Thursday.

But shares in electric car maker Tesla sank more than 12 percent after Elon Musk's company missed earnings estimates in the fourth quarter and projected slower vehicle growth in 2024.

Boeing dropped 5.7 percent after the Federal Aviation Administration said it would limit the production growth plan of the 737 MAX until the company improves quality control, after the mid-flight blowout of a panel on a MAX 9 Alaska Airlines jet earlier this month.

- Key figures around 2140 GMT -

New York - Dow: UP 0.6 percent at 38,049.13 (close)

New York - S&P 500: UP 0.5 percent at 4,894.16 (close)

New York - Nasdaq: UP 0.2 percent at 15,510.50 (close)

London - FTSE 100: FLAT at 7,529.73 (close)

Paris - CAC 40: UP 0.1 percent at 7,464.20 (close)

Frankfurt - DAX: UP 0.1 percent at 16,906.92 (close)

EURO STOXX 50: UP 0.4 percent at 4,582.26 (close)

Tokyo - Nikkei 225: FLAT at 36,236.47 (close)

Hong Kong - Hang Seng Index: UP 2.0 percent at 16,211.96 (close)

Shanghai - Composite: UP 3.0 percent at 2,906.11 (close)

Euro/dollar: DOWN at $1.0848 from $1.0885 on Wednesday

Dollar/yen: UP at 147.67 yen from 147.51 yen

Euro/pound: DOWN at 85.35 pence from 85.53 pence

Pound/dollar: DOWN at $1.2710 from $1.2726

Brent North Sea Crude: UP 3.0 percent at $82.43 per barrel

West Texas Intermediate: UP 3.0 percent at $77.36 per barrel

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