SWEDEN
 
In Stockholm, the OMX closed Thursday on 1,021.43, down 2.50% on the day.
 
Swedish jobless rate dropped in May from the preceding month.
 
Sweden's National Institute of Economic Research, or NIER, has raised its growth forecast for 2010, citing the expansionary fiscal policy and a rapid upturn in external demand.
 
The think tank has raised its GDP growth forecast for 2010 to 3.7% from the March estimate of 2.4% growth.
 
"The Swedish economy is on the road to recovery," the NIER said in a report published Wednesday. "The turning point has been passed with the aid of an expansionary economic policy and a rapid upturn in demand for Swedish exports of goods."
 
Higher consumption and investment is expected to drive the recovery, the report noted. However, the NIER said the economy faces a considerable threat associated with the problems in the Eurozone.
 
Subsequently, the NIER said its growth forecast for 2011 has been revised down to 3% from the previously estimated 3.8%. In 2012, the growth rate will slow further to 2.8%, according to the report, as the Eurozone crisis may have a moderate impact on the Swedish economy.
 
The report also said that the expansionary monetary policy along with the expected rise in employment will increase the total disposable income by 6% during 2010 to 2012.
 
During the period, consumption is also expected to improve due to the fiscal policy. Strong optimism among firms and households and improved Labour market conditions are also indicative of the growth, the report noted.
 
The think-tank, however, opined that further unfunded measures totaling SEK 25 billion will be needed in 2011, in addition to those already enacted by the Swedish Parliament or announced by the Government.
 
"The long, drawn-out economic slump requires an economic policy with an expansionary thrust in the next few years as well," the report said.
 
The NIER said the central bank is likely to raise the repo-rate gradually while ensuring that monetary policy remains expansionary.
 
Additionally, the report predicted that the global economy would grow 4% annually during 2010 to 2012, driven by robust growth in emerging economies.
 
The NIER noted, however that the European deficit crisis and fiscal consolidation measures in most of the countries there will hold back the recovery in OECD nations.
 
Moreover, there has been lingering uncertainty about the political capacity of some of the nations to deal with the problems related to public finances and to take restrictive measures accordingly. This may lead to weaker than expected growth, the report said.
 
The unemployment rate will be at 8.9% of the Labour force in 2010, the report said, but the rate is expected to fall to 8.8% next year and drop further to 8.5% in 2012. The March forecast had indicated that unemployment would rise to 9.1% and stay steady the next year.
 
The NIER also said the consumer price index may rise 1.1% this year before accelerating to 1.5% in 2011 and 2.4% in 2012. The new inflation forecast was almost unchanged compared to the March estimate.
 
Meanwhile, consumer sentiment data from the NIER showed that Swedes are optimistic about the current economic situation, with the consumer confidence indicator rising 3.2 points to 22 in June.
 
Official data showed that Swedish growth accelerated to 1.4% in the first quarter from a revised 0.4% expansion in the fourth quarter of 2009. The growth came at a time when most other European economies were struggling to get out of recession.
 
On an unadjusted basis, the unemployment rate stood at 8.8% in May, down from 9.5% in April, data from Statistics Sweden showed Tuesday. The rate stood at 9% in the same period last year. Economists were looking for a figure of 9.4%.
 
The seasonally adjusted jobless rate dropped to 8.8% in May from 9.1% in the previous month. Economists had expected a rate of 9.1%.
 
Among men, the number of unemployed and the unemployment rate slightly decreased in May, while the trend in unemployment among women climbed. The unadjusted unemployment rate for men was 9.1% and for women was 8.5%.
 
The number of persons in the Labour force totaled a seasonally adjusted 4.95 million in May, smaller than the 4.97 million in the previous month. Thus, the Labour force participation rate dropped to 70.5% from 71% in the previous month. The employment rate was 64.4% in May versus 64.5% in the previous month.
 
The number of unemployed persons aged between 15-74 were 434,000 in May, smaller than 446,000 persons in the previous year. The number of employed grew by 15,000 from last year to 4.50 million on an unadjusted basis.
 
An indicator of consumer sentiment in Sweden rose unexpectedly in June, suggesting that Swedes are buoyant about the current economic situation.
 
The National Institute of Economic Research's consumer confidence indicator rose 3.2 points to 22.0 in June. This means that confidence in the economic situation is considerably more positive than normal. Economists had forecast a reading of 18.0.
 
Confidence in the economic situation was buoyant, with the indictor rising 9.3 points to 36.8. On the other hand, the indicator of the personal finance situation edged down to 8.0 from 8.8.
 
The index measuring unemployment expectations of consumers over the next 12 months slipped to -38.0 from -32.0. One year ahead household inflation expectations moderated to 2.4% from 2.6% in May.
 
At the same time, Sweden's business sentiment indicator fell one point to 23. The confidence indicator for the manufacturing sector recorded the biggest increase, rising 7 points to 10. Economists were looking for a score of 5. The biggest slump was registered in the retail sector.
 
FINLAND
 
Helsinki's OMX finished Thursday at 6,419.72, a dip of 2.18%.
 
The Finnish jobless rate rose in May from the previous month.
 
The jobless rate climbed to 10.5% in May from 9.3% in April. The rate was 10.9% in the previous year.
 
The unemployment rate of men remained unchanged at 12% and that of women declined by 0.7 percentage points to 9%. At the same time, after adjusted for seasonal and random variation, the trend of the unemployment rate was 8.4%. The number of unemployed totaled 293,000 in May, which was 12,000 persons lower than a year earlier.
 
"The Labour Force Survey's unemployment figures are as a rule high in May , when students enter the labour market," Statistics Finland said. "The unemployment figures usually return to a lower level already in June."
 
Youth unemployment stood lower in May when compared with a year ago. The number of unemployed persons aged 15 to 24 was 137,000, which was 22,000 lower than a year earlier. The lower figure was partly due to the fact that a larger share of 15 to 24-year-old students than before remained outside the labour market, that is, did not look for a job, the agency said. Thus, the number of 15 to 24-year-olds not belonging to the labour force was now 28,000 higher than one year earlier, it added.
 
At the same time, the number of employed persons decreased to 2.48 million from 2.49 million last year. The employment rate, that is the proportion of the employed among persons aged 15 to 64, stood at 68.6%, which was 0.7 percentage points lower than the previous year.
 
Meanwhile, the Labour force participation rate dropped to 68.7% in May from 69.6% a year ago. The total Labour force amounted to 2.78 million, smaller than 2.79 million last year. 
 
DENMARK
 
In Copenhagen, the OMX drew the session to a close on 407.01, declining 1.68%.
 
Denmark's consumer confidence indicator weakened in June for the second month in a row.
 
The consumer confidence index stood at minus 1.5 in June, down from 3 in the previous month. Among the sub indicators, the index for current economic situation in Denmark decreased to minus 20.7 in June from minus 12.5 in the previous month. Meanwhile, the gauge for economic situation for the next twelve months dropped to 11.8 from 18.
 
The index for consumers' assessment on their own current financial situation showed a flat reading in June, down from 3 in the previous month. The measure for consumers' expectation on the future economic situation fell to 10.7 from 12.7. Further, consumers expect that unemployment will be lower in a year than Thursday.
 
Denmark's economic growth accelerated in the first quarter. The gross domestic product grew 0.6% on a sequential basis in the first quarter, faster than 0.1% expansion in the previous quarter. 
 
NORWAY
 
The OBX in Oslo finished trading Thursday on 320.09, down 2.07%.
 
The Norwegian jobless rate came in at 3.7% in April, measured by the average of three months from March to May, the Statistics Norway reported Wednesday. The expected rate was 3.5%. The unemployment rate stood at 3.4% in December to February and it was 3.5% during February to April.
 
The seasonally adjusted figures for those registered unemployed with the Labour and Welfare Organisation rose by 2,000. Further, the employment kept stable from January to April, the statistical office added. January's employment was the average of December to February figures. Adjusted for seasonal variations, there was a decrease in employment of 4,000 persons. This was within the error margin of the Labour Force Survey, the statistical office said.
 
Norway's central bank maintained its key policy rate on Wednesday and signaled that it may retain the current level for some time.
 
The Norges Bank's Executive Board decided to keep the key policy rate unchanged at 2%. In May, the bank had raised the key policy rate by 0.25 percentage point from 1.75%, for the first time since December 2009.
 
"The moderate recovery in the Norwegian economy is continuing, and inflation has moved broadly in line with projections," said Deputy Governor Jan F. Qvigstad. "However, the turmoil in global financial markets is creating uncertainty with regard to economic developments."
 
"This suggests that the interest rate should be kept unchanged for a period and that the further increase will occur later than previously envisaged," the bank said in a statement. The central bank expects the key policy rate to be in the range of 1.5%-2.5% till the publication of the next Monetary Policy Report on October 27.
 
The Norges Bank's decision to keep interest rates on hold and lower its interest rate forecast suggests that the Bank looks set to tread a cautious path over the coming months, Capital Economics' Ben May said. The central bank now sees interest rates rising to 2.75% by December 2011, which is around 75 basis points lower than its previous forecast, the economist noted.
 
Clearly, this more dovish view could prompt the krone to weaken in the short-term, May said. "But with ECB interest rates likely to remain on hold until 2012 and lingering concerns about the health of the Euro-zone public finances, we expect the krone to appreciate against the Euro over the coming months," he added.
 
Norway's consumer price inflation slowed for the second straight month in May. The consumer price index rose 2.5% over a year earlier, slowing from 3.3% growth in April. The nation's gross domestic product dropped slightly by 0.1% sequentially in the first quarter, compared to the 0.1% growth in the previous quarter.
 
In May, the Norges Bank chief Svein Gjedrem said the European debt crisis and related developments have increased the uncertainty surrounding the outlook for the Norwegian economy and interest rates. "The outlook for Europe is uncertain," the bank said Thursday. 
 
SPAIN
 
In Madrid, the IBEX ended the day on 9,586.50, a huge daily drop of 3.03%.
 
International ratings agency Standard & Poor's held its credit ratings on six Spanish banks on Monday amid speculation of tension in the Spanish banking system, reports said.
 
The agency confirmed its A/A-1 rating on Caja Madrid, Banco Popular, Banco de Sabadell, Ibercaja and Bankinter, and also its A/A-1+ rating on La Caixa. Spain's biggest banks - Banco Santander and BBVA - were excluded because of their multinational presence.
 
However, the agency warned that most of the outlooks are negative, "reflecting the possibility that loan and operating performance may worsen more than we currently expect in a tough economic environment."
 
Spain's savings banks have been hard hit by the property sector crash and a number of these regional banks are in merger talks to shore up their solvency. Doubts have been cast over the strength of the country's banking sector after last month's government rescue of one of the country's biggest regional lenders, Cajasur.
 
Spanish central government budget deficit narrowed in the first five months of this year compared to a year earlier, figures released by the Economy Ministry showed Tuesday.
 
The deficit totaled Eur 18.82 billion, or 1.79% of gross domestic product. Compared to the deficit recorded during the same period a year ago, the deficit is lower by 5.7%.
 
Tax revenues in the first five months of this year rose 7.4% Eur 65.98 billion. Revenue from income tax increased 3.6%.
 
Spain saw a budget deficit of 11.2% of GDP in 2009, much above the EU limit of 3% of GDP. The country has a budget deficit target of 9.3% of GDP for this year.
 
 Spain's parliament on Tuesday approved government-proposed Labour market reforms aimed at cutting down the country's high unemployment rate and reviving the economy.
 
While 168 lawmakers from the governing Socialist Party voted in favor of the measure in the 350-seat assembly, eight lawmakers voted against it.
 
Most notably, 173 lawmakers from Spain's two biggest opposition parties, the Popular Party (PP) and Catalan nationalist party (CIU), abstained from voting on the measure.
 
Ahead of the vote, Labour Minister Celestino Corbacho told parliament that some eight million workers who are presently unemployed or working under temporary employment contract stand to benefit directly from the proposed reforms.
 
Corbacho told lawmakers that the proposed measures would increase flexibility for companies without reducing "job security, promoting stable employment instead of uncertainty."
 
The Labour reforms approved Tuesday by the parliament include promoting youth employment and cutting the cost of firing workers. The reforms are aimed at encouraging companies in Spain to hire more staff without fearing the otherwise high cost of firing employees. They are also expected to discourage the use of temporary employment contracts that have few benefits and rights.
 
Earlier, Spain's Socialist Prime Minister Jose Luis Rodriguez Zapatero defended the proposed Labour reforms, claiming that they "maintain the rights of the workers and match the expectations of those workers who have precarious jobs."
 
Last week, Spain's two major workers unions, namely the UGT and CCOO unions, called a 24-hour general strike on 29th September to protest against Labour market reforms and budget cuts planned by the country's government.
 
The UGT and CCOO unions jointly have almost two million workers as their members. The general strike is to protest against the government-planned budget cuts and Labour market reforms, which they believe would make it easier and cheaper to fire workers and raise the legal retirement age.
 
Spain had entered recession in the second quarter of 2008, amidst the global financial meltdown and the property market crisis. Though Spain managed to move out of recession in the first quarter, the country's unemployment rate remains at 20%, which is almost twice the Eurozone average.
 
Last month, Spain's parliament approved a €15 billion ($19 billion) austerity plan aimed at reducing its large fiscal deficit and easing concerns that the country could follow Greece into a debt crisis. The tough cost cutting measures are expected to save the Spanish government 15 billion Euros in 2010 and 2011.
 
The austerity measures are also expected to reduce Spain's deficit from its current level of more than 11% of gross domestic product to 6% of GDP by 2011 and to 3% by 2013. The plan calls for slashing salaries of Cabinet ministers and other senior officials by 15%, and includes an average five-percent pay cut for public sector workers from June, and a pay freeze from 2011.
 
The latest austerity plan approved last month is over and above a 50-billion-Euro austerity package announced in January to reduce Spain's budget deficit from the 11.2% of GDP last year to the Eurozone limit of 3% by 2013.
 
The austerity measures and the Labour market reforms follow an International Monetary Fund (IMF) warning issued last month that Spain's economy needs "far-reaching and comprehensive reforms" of its Labour market and banking sector if it wants to resolve its huge debt and deficit problems, as well as the historically high unemployment rate.
 
The EU and the IMF have readied a financial support plan for fiscally frail countries in the European Union, including Spain and Portugal, to ease fears over the massive sovereign debt of those countries and to ensure that the Greece-financial crisis does not spill over into other EU states.
 
But both IMF and EU have demanded strict budget cuts and economic reforms in return for the financial back-up package, which can be utilized if required. Earlier in the week, the Spanish government and the European Commission denied reports that Spain was seeking an EU aid package. 
 
PORTUGAL
 
The PSI General Index in Lisbon finished the session Thursday on 2,571.29, a dip of 1.94%.
 
Portugal's producer price inflation increased for the fifth straight month in May.
 
The producer price index, or PPI, rose 4.1% year-on-year in May, faster than the 4% growth in the previous month. Producer prices increased for the sixth consecutive month. A year earlier, the PPI decreased 4.9%.
 
Manufacturing PPI increased 4.3% annually in May, compared to a 4.2% rise in April. Producer prices in energy sector rose 3.3%, same as in the previous month.
 
On a monthly basis, producer prices rose 0.4% in May, following a 1.1% rise in April. Producer prices increased for the seventh month in a row. At the same time, manufacturing PPI grew 0.5% versus a 1.1% rise in April.
 
Portugal's current account deficit narrowed in the January to April period from a year ago, data from the Bank of Portugal showed on Wednesday.
 
The current account deficit stood at Eur 5.17 billion in the January to April period, narrowing from Eur 6.29 billion deficit last year. The balance in goods account rose to minus Eur 5.50 billion from Eur 5.59 billion last year, while the balance in the services account increased to Eur 1.38 billion from Eur 1.31 billion.
 
The income account balance increased to Eur 1.64 billion from Eur 2.72 billion. At the same time, the capital account balance decreased to Eur 221 million from Eur 733 million last year.
 
Meanwhile, the financial account surplus dropped to Eur 5.84 billion in the January to April period from Eur 6.33 billion a year ago. The direct investment fell to Eur 1.03 billion from Eur 1.15 billion, while investment abroad rose to minus Eur 287.9 million from minus Eur 706.7 million. 
 
ITALY
 
Italy's benchmark FTSE MIB Index retreated 416.53, or 2.1%, to 19,942.39 in Milan, sliding the most since June 4.
 
Fiat fell for a third day, declining 2.6% to 9.08 Euros. The Italian carmaker may cut investments or create a new company to manage its Pomigliano car factory, Il Sole 24 Ore reported, without saying where it got the information.
 
Intesa Sanpaolo dropped 3% to 2.25 Euros, falling for the fourth day. Italy's second-biggest bank agrees with stress tests on banks as long as the criteria used is similar for all institutions, Chief Executive Officer Corrado Passera said at a seminar in Madrid Thursday.
 
Telecom Italia, Italy's biggest phone company, slipped 2.4% to 0.938 Euros, its third loss. The company is being probed for abuse of its dominant position by Italy's antitrust regulator, according to a statement on the watchdog's website Thursday.
 
UniCredit fell for a third day, sliding 0.3% to 1.905 Euros. Aabar Investments Chief Executive Officer Mohamed Badawy Al-Husseiny said Thursday the Abu Dhabi- based fund acquired a 4.99% stake in UniCredit SpA, Italy's biggest bank.
 
Italy's seasonally adjusted retail sales fell in April for the first time in three months, figures released by the statistical office Istat showed Thursday.
 
Retail sales decreased 0.3% month-on-month following a revised 0.4% rise in March. Economists had forecast just 0.1% decline. A year ago, sales were up 1%. Sales of food decreased 0.7% in April and non-food retail sales dropped 0.1%.
 
On an annual basis, unadjusted retail sales were down 0.5% in April. It follows downwardly revised 2.7% increase in March. Economists had foreseen 2.1% increase.
 
During the period from January to April, retail sales decreased 0.2% over the same period a year ago, with food sales falling 0.7% and non-food sales rising 0.1%.
 
Italy's consumer confidence index dropped to the lowest level since March 2009 as the assessment on personal economic situation deteriorated, survey data from the ISAE economic research institute showed Wednesday.
 
The consumer sentiment index logged 104.4 in June, down from 105.4 in May. Economists had forecast a reading of 105. The think tank said a measure for Italians' own economic situation dropped to 119.1 from 120.3 in May. Similarly, an index measuring the current state of the economy declined to 114.2 from 116.9. However, households' short-term economic expectations increased with the corresponding indicator rising to 94.6 from 92 in May.
 
Earlier in the day, market research group GfK said German consumer confidence is set to stabilize in July. Wednesday, a flash report from the European Commission showed that consumer confidence in the Eurozone rose slightly in June after a sharp drop in May. The consumer confidence index rose to minus 17.3 in June from a revised minus 17.8 in May. 
 
GREECE
 
In Athens the Athex Composite ended the day at 1,468.86, the worst performing market in Europe Thursday with a drop of 3.71%.
 
Greece will overcome its fiscal crisis without a debt restructuring, Finance Minister George Papaconstantinou reportedly said Wednesday.
 
In an interview with German newspaper Handelsblatt, Papaconstantinou said Greece is on the right track to reduce its budget deficit to below the approved level of 3% of GDP by the end of 2012. He added that the Greek economy is expected to return to growth by the middle of next year. Exports are increasing and the drop in private investment is less than feared.
 
Papaconstantinou denied reports that the European Commission is dissatisfied with the Greek deficit reduction plans. He stated that Athens needs no bail-out action and authorities now know what has to be done.
 
On June 17, the European Commission, the European Central Bank and the International Monetary Fund said in a joint statement that Greece's economic programme is on track and the country's government is implementing policies as agreed.
 
Greece's current account deficit stood at 2.952 billion Euros in April, unchanged from a year earlier, the Bank of Greece said Wednesday.
 
The steady deficit figure indicated that declines in the trade deficit and the income account deficit were offset by a drop in the service balance. Moreover, the current transfers account also posted a deficit in April, the bank said.
 
A 75 million Euro decline in the trade deficit, excluding oil and ships, combined with a 65 million Euro drop in net payments for purchases of ships accounted for the decrease in the overall trade deficit.
 
Meanwhile, the surplus of the services balance narrowed by 50 million Euros compared to last year, mainly due to a 32 million Euro decrease in net transport receipts, the central bank noted.
 
The income account deficit shrank by 84 million Euros due to lower net interest, dividend and profit payments. Finally, the current transfers deficit widened to 175 million Euros from 1.4 million Euros in April 2009, as EU transfers to general government were lower than general government payments to the EU.
 
During January to April, the current account deficit grew by 2.6 billion Euros or 25.5% year-on-year and reached 12.9 billion Euros, primarily reflecting a large decrease in current transfers to general government and a rise in the net oil import bill, according to the bank.
 
In April, the capital transfers balance showed a surplus of 11 million Euros, considerably smaller than the 335 million Euros a year ago.
 
During the month, foreign direct investment in Greece recorded a net inflow of 39 million Euros. Portfolio investment posted a net outflow of 7 billion Euros, partly reflecting a 8.4 billion Euro outflow in non-residents' investment in Greek government bonds and Treasury bills.