Image copyrightDennis DoyleImage captionSpain's shops hope the economic recovery will drive strong Christmas business
Spanish shops are now hiring at pre-crisis levels, while business confidence is also holding up in Italy, according to official figures.
Spain's national statistics agency said retail hiring in November grew 1.8% on last year, the fastest rate since Spain entered a deep recession in 2008.
In Italy, figures on Tuesday showed business confidence fell in December, but remained close to recent highs.
Italy and Spain are the eurozone's third and fourth largest economies.
Spanish retail sales increased 3.3% in November compared to last year, the sixteenth consecutive month of growth, according to the National Statistics Institute.
Christmas confidence
Many retailers are confident this will be the best Christmas period for business since the country's recovery started.
Higher household spending in Spain this year, fuelled by falling oil prices and tax cuts, has helped to boost Spanish shops and drive economic growth.
Spain's economy grew 0.8% in the third quarter, while the growth rate in Italy was lower than expected at 0.2%, according to EU figures.
Despite the slowdown, morale among Italian businesses and consumers remains high.
Business confidence fell to 105.8 from 107.1 in November, according to Italian statistic agency ISTAT's composite business morale index, which combines surveys of the manufacturing, retail, construction and services sectors.
Consumer confidence dropped to 117.6 from a record high of 118.4 in November, although it was still above analyst expectations.
Global stocks extended a rally into a third day on Wednesday as oil edged up from 11-year lows and the dollar eked out minor gains in trade gradually winding down for the holidays.
European shares rose on the last full trading day before the Christmas break, following Asian bourses higher.
The pan-European FTSEurofirst 300 index .FTEU3 rose 1.5 percent, led by miners which rallied on higher copper prices. London-listed miners Glencore (GLEN.L) and Anglo American (AAL.L) both rose more than 4 percent.
"We think commodities are due for a bounce, and that should help mining stocks," HED Capital managing director, Richard Edwards, said.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.6 percent to the highest in almost two weeks. Tokyo markets were closed for the Emperor's Birthday holiday.
In China, the blue-chip CSI 300 index .CSI300 broke a four-day winning streak and closed down 0.3 percent while the Shanghai Composite index .SSEC ended down 0.4 percent.
China's state news agency Xinhua said slashing the country's excess steel capacity would be a top priority for the government over the next five years.
MSCI's all-country world stocks index .MIWD00000PUS was up 0.36 percent, though it is down 4.5 percent for the year.
Equity investors were encouraged after gains of 1 percent in the Dow Jones industrial average .DJI lifted Wall Street for a second day on Tuesday.
Data on Tuesday showed U.S. economic growth in the third quarter was revised down slightly to a 2.0 percent annual pace but this still beat forecasts.
Oil prices struggled to lift off lows plumbed earlier in the week. Brent crude LCOc1, the global benchmark, stood at $36.50 a barrel, up 39 cents, having touched an 11-year low of $35.98 late on Tuesday.
The dollar strengthened versus the euro and held broadly steady against a basket of major currencies.
The euro EUR= fell 0.3 percent to $1.0922 while the Japanese yen JPY= was barely changed at 120.97 per dollar.
The euro has performed well this year at times of risk aversion, as investors have unwound carry trades in which the euro is borrowed then sold for higher-yielding currencies.
"When you are in an environment where rate expectations are stable, the euro is mostly driven by risk sentiment," said Credit Agricole currency strategist Manuel Oliveri in London.
"So we could imagine that the euro goes to $1.10 or so into the end of the year,"
Yields on low-risk government bonds were little changed. German 10-year Bunds DE10YT=TWEB, the euro zone benchmark, yielded 0.61 percent, up 1 basis point on the day.
Ten-year U.S. Treasuries US10YT=RR yielded 2.239 percent, unchanged from Tuesday's close in New York.
Gold XAU= traded at $1,071.60 an ounce.
(Additional reporting by Wayne Cole in Sydney; editing by John Stonestreet)
Lift off! For the first time in ten years the US Federal Reserve has raised interest rates.
As expected rates were increased by 0.25% to a range of 0.25% to 0.5%.
For almost a decade money has been cheap - some would argue too cheap. But today's rise in US interest rates could be the beginning of a new era, one in which the cost of borrowing rises - possibly for years.
So should we cancel Christmas, buy some tinned food and hide in the cellar, or shrug and return to our online shopping?
Let's take a look at what, and who, might be affected by the expected increase.
Why it matters for the US economy
A rate rise can be seen as a vote of confidence by the Federal Reserve in the US economy.
But despite those healthy indicators, interest rates are at emergency levels.Between September 2007 and December 2008 the benchmark Federal Funds rates fell from 5.25% to between zero and 0.25% in an effort to stave off recession.
Economists argue it is high time rates started to head higher, to prevent excessive consumer borrowing and prevent bubbles emerging in the housing market and other types of assets.
There is some concern over companies that have borrowed too much. Rising interest rates could make it more expensive or impossible for them to refinance their debts.
In particular fracking firms, which produce oil and gas, have been under scrutiny by investors. Not only do they tend to borrow quite heavily, they are also exposed to the falling price of oil. Rising interest rates could see failure rates among such firms rise.
Image copyrightGetty Images
Why it matters for US consumers
The effect of the first rise in interest rates on US consumers is likely to be muted. There are a few reasons for this.
A 0.25% rise is fairly modest and in the short term the cost of borrowing will not rise by much.
Also American households are less in debt than before the financial crisis. According to the New York Federal Reserve overall household debt remains 5% below its peak in 2008.
And US home owners are less sensitive to moves in interest rates as mortgage rates are usually fixed over 30 years.
Nevertheless the extended period of low interest rates has fuelled rising house prices, record car sales and expansion in credit card debt.
Rising interest rates should cool conditions in those hotter markets.
Image copyrightGetty Images
Why it matters in emerging markets
There are a number of circuits in the global economy which link what happens at the US Federal Reserve building in Washington, with countries that have developing economies like China and Brazil.
An era of rising US interest rates is likely to strengthen the dollar. That could cause pain for companies and countries that have raised debt in dollars. If they earn much of their income in a local currency, then servicing a debt in dollars will become more expensive as the dollar rises.
Rising US interest rates affects how investors view risk. If they can earn a more attractive return on investments in the US, they might shun investments in far-flung and riskier nations.
So companies and governments in the emerging world could find it harder to attract investment, or refinance existing debts.
Finally, higher interest rates also come at a bad time for many emerging economies, particularly those that rely on exporting commodities. The price of oil, metals and agricultural commodities have fallen dramatically.
So companies and governments could face higher borrowing costs at a time when earnings from mining and agriculture are falling.
The view from Africa: Matthew Davies, Africa Business Report
The rise in US interest rates is another cloud in what is rapidly becoming a perfect storm for many African economies.
Though widely anticipated, the increase in the Federal Funds rate triggered yet another fall in value of Africa's most widely traded currency, the South African rand.
In an effort to mitigate the inflationary effects of their falling currencies, Africa's central banks have been raising interest rates, which in itself can limit economic growth.
But the Fed's move really means a reversal of the flow of cheap money. Over the past few years, so-called "hot money" has been looking for decent rates of return and billions flowed into Africa.
Now many African governments are lumbered with large dollar debts and a reduced capability to service them.
The past year has also seen big falls in commodity prices as demand from China has slumped.
The persistently low oil price has been hampering the national budget's of Nigeria and Angola.
If this perfect storm gets much worse, it could be a bleak 2016 for several African economies.
The currency markets are extremely sensitive to moves in interest rates. The US dollar has already been rising in anticipation of higher interest rates.
Against a basket of other currencies the dollar is up almost 4% since October, when the chair of the US Federal Reserve Janet Yellen indicated that rates could head higher in December.
Economists are not sure how much further the dollar will strengthen and much depends on the Fed's actions over the coming months.
The effects of the stronger dollar can already be seen in the earnings reports of US companies. Many have blamed weaker profits on the strength of the dollar, which erodes the value of sales made overseas. It also makes their exports less competitive on the international markets.
Image copyrightGetty Images
Why it matters for the UK
The Bank of England denies that its own decisions on interest rates track those of the US Federal Reserve.
However, economists say that now the Fed has moved higher, it will make it easier for the Bank of England and its chief Mark Carney to raise rates as well.
The UK economy is arguably in even better condition than its US counterpart and many economists say that a rate rise is long overdue.
If the Bank of England follows the Fed, then the pound could rise too, particularly against the euro. That would be painful for many British exporters, as the European Union is the biggest market for British goods.
Stocks on Wall Street dropped in afternoon trading, having recorded big rises on Wednesday after the Fed's announcement.
The Dow Jones rose 1.3% on Wednesday, but on Thursday it closed down 1.43%.
However, analysts were upbeat about market performance running up to Christmas.
"With the uncertainty surrounding the Fed now cleared and panic not ensuing, everything is now in place for a strong end to the year," said Craig Erlam at Oanda trading group.
Carmakers, banks and insurers - stocks which do well when an economy is growing - rose.
'No nasty surprises'
On the currency markets, the dollar rose against major currencies following the Fed's decision.
Higher rates make the US a more attractive market for deposits, meaning demand for the dollar is likely to rise.
The dollar rose by 0.95% against the euro, to €0.9255, and by 0.76% against the pound to, £0.6722.
British government-issued bonds, or gilts, rose in price following the Fed decision, meaning lower yields, or income.
While the spectre of higher rates is often bad for existing debt prices, analysts said investors were pleased future Fed rate rises would be "gradual" in nature.
"Overall, there were no nasty surprises in there - the Fed sounded quite dovish, data-dependent, so I think fixed income markets were quite happy with it," Jason Simpson at Societe Generale.
Eighteen nations including the U.S., Japan and Germany will work together to develop international carbon markets to help speed the pace of emission reductions under the Paris climate deal struck Saturday, according to the New Zealand government.
The nations will develop standards and guidelines to ensure trading of carbon credits has environmental integrity, according to a statement sent by Jonathan Franklin, spokesman for Tim Groser, New Zealand’s climate and trade minister.
Saturday’s deal by envoys from more than 190 countries gathered in Paris allows cooperation between nations to meet emission-limitation pledges. It also creates a new market to promote sustainable development, speeding carbon cuts by state entities and private companies. China plans to create the world’s biggest carbon market by 2017, about double the size of 10-year old European program, currently the largest. China and India aren’t part of the 18-nation group.
The standards will encourage other countries to support markets to “complement the Paris Agreement and with the ultimate aim of strengthening action under the United Nations Framework Convention on Climate Change,” the 18 countries said. “Through this declaration we want to send a clear signal to the global carbon market and provide certainty that there is an important role for markets in the post-2020 period.”
The countries are Australia, Canada, Chile, Colombia, Germany, Iceland, Indonesia, Italy, Japan, Mexico, Netherlands, New Zealand, Panama, Papua New Guinea, Republic of Korea, Senegal, Ukraine, and the U.S.
Image copyrightReutersImage captionPravin Gordhan served as South African finance minister from 2009 until last year
South African President Jacob Zuma has replaced newly appointed Finance Minister David van Rooyen with the more experienced Pravin Gordhan in a surprise Sunday night announcement.
On Wednesday, the president sacked previous Finance Minister Nhlanhla Nene in a move that sent the rand to record lows.
His replacement for less than a week, Mr van Rooyen, was a little-known MP.
The moves come amid widespread concern over South Africa's struggling economy.
Mr Gordhan was widely respected when he served as South Africa's finance minister from 2009 until 2014.
His re-appointment sent the currency up, recovering from just over 16 rand to the dollar to about 15 by Monday morning, according to currency site xe.com.
But the new finance minister has a hard job with unemployment currently above 25%, growth sluggish and credit rating agency Fitch recently downgrading South Africa to one notch above "junk" status.
Image copyrightGetty ImagesImage captionThe sackings have increased pressure on South African President Jacob Zuma
The brief tenure of Mr van Rooyen and the uncertainty it caused may have damaged South Africa's reputation further, analysts say.
Mohammed Nalla, head of research at Nedbank Capital, said having a finance minister serve just a few days did not bode well.
"International investors are probably thinking: 'Why didn't the president make a much more considered decision in the first place?'" he said.
'Russian roulette'
The leader of the opposition Democratic Alliance, Mmusi Maimane, said: "This is reckless by President Zuma - he is playing Russian roulette with the South African economy."
A statement from Mr Zuma's office said he had "received many representations" to reconsider his decision to appoint Mr van Rooyen.
"As a democratic government, we emphasise the importance of listening to the people and to respond to their views," it added.
Fitch, which downgraded South Africa earlier this month, said on Thursday that Mr Nene's sacking "raised more negative than positive questions".
Image copyrightGetty ImagesImage captionThe sacking of Finance Minister Nhlanhla Nene last week led to a sharp decline in the value of the rand
Mr Nene's reluctance to approve a plan to build several nuclear power stations at a cost of up to $100bn is thought to have contributed to his removal as finance minister.
Mr van Rooyen will take over from Mr Gordhan as minister of co-operative governance and traditional affairs.
Marches to call for Mr Zuma's removal as president are being planned for five cities in South Africa on Wednesday - a public holiday.
The US Federal Reserve is expected to raise interest rates on the same day in a move that could put economies in countries like South Africa under further pressure.
Former Health Minister Barbara Hogan on Friday called on Mr Zuma to resign. The highest-profile ANC member to oppose Mr Nene's removal, she said that the president had crossed a line and needed to be held to account.
Razia Khan, an analyst with Standard Chartered bank, said the week's turmoil was "perhaps the first instance since 2007 that Zuma has come under severe pressure within the party".
A man walks past an electronic board showing Japan's Nikkei average (top of upper right screen) and the Japanese yen's exchange rate against against the U.S. dollar outside a brokerage in Tokyo, Japan, December 4, 2015.
REUTERS/TORU HANAI
World stocks were on the brink of a two-month low on Friday, as beaten-down oil prices and a slide in China's yuan to 4-1/2 year lows left markets in a somber mood.
Volatile oil markets and worries about China, the world's biggest commodities consumer, have pressured many markets ahead of a widely anticipated interest rate hike by the U.S. Federal Reserve next week.
MSCI's world stock index .MIWD00000PUS fell for a fifth straight day as emerging markets tumbled again and European shares .FTEU3 opened at a two-month low while the dollar steadied.
"We are in risk-off mode," said Piotr Matys, emerging market currency strategist at Rabobank in London.
"Another round of selling in commodities with oil prices at new lows has sent global stocks lower and emerging market commodity currencies are under pressure."
The Russian rouble RUB= tumbled 2 percent against the dollar, with focus on a meeting of the Russian central bank later on Friday.
Investors were also waiting for U.S. data which could cement expectations that the Fed is gearing up to hike rates for the first time in a decade next week.
U.S. retail sales, inflation and consumer sentiment data is due between 8.30 a.m ET and 10 a.m. ET.
European shares .FTEU3 fell 0.7 percent, declining for a fourth straight session, while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS hit a two-month low and posted a weekly loss of just over 3 percent.
YUAN LOWER AGAIN
China's yuan fell to its weakest in 4-1/2 years CNY=CFXS at 6.4564 per dollar and posted its longest weekly losing streak in a decade, dragging emerging Asian currencies lower, on concerns about its slowing economy and expectations of a U.S. rate hike next week.
Lower daily fixings for the currency by China's central bank have also raised questions about how far Beijing intends to let the currency depreciate.
"A U.S. rate hike would have a major impact on money flows out of emerging markets including Hong Kong and China," said Linus Yip, chief strategist at First Shanghai Securities.
"Also, if the yuan continues to depreciate, that's negative to stocks as well, because it means investors are not confident about China's economic restructuring."
Chinese shares closed lower .CSI300 ahead of a spate of economic data scheduled to be released on Saturday. ECONCN
China's economy is on track to post about 7 percent annual growth in 2015, an official at the country's top economic planner said at a briefing on Friday.
NEW LOW FOR OIL
Crude oil prices remained at levels not seen since early 2009 as output in the Middle East continued to rise despite an already huge global glut.
Brent crude futures LCOc1 were down 0.5 percent at $39.52 a barrel, not far off almost seven-year lows hit earlier in the session at $39.38 a barrel.
The sharp fall in oil prices since OPEC said last week it would keep production high has fueled expectations for lower inflation, helping push down European government bond yields.
The dollar index .DXY, which tracks the U.S. currency against a basket of six major rivals, edged down slightly. It was on track for a weekly loss of about 0.5 percent after investors trimmed dollar-long positions before the Fed meeting.
Fed fund futures place an 85 percent chance of the Fed raising rates at its Dec. 15-16 meeting. A recent Reuters poll also showed that all but one of 18 brokerages that deal directly with the Fed expect a rate increase.
The euro EUR= edged up about 0.2 percent to $1.0965, after comments from the European Central Bank's Ewald Nowotny this week raised doubts about the extent to which U.S. and European monetary policy will diverge.
Emerging market stocks .MSCIEF were down for an eighth day running and on course for their worst week since September.
South Africa's rand ZAR=D3 hit a new record low following the abrupt dismissal this week of respected Finance Minister Nhlanhla Nene.
Dennis Doyle
