UBS at 15 month high BP increases its dividend

European markets rose steadily in early trading on Tuesday, led by UBS after it confirmed its massive cost cutting plans and as BP raised its dividend. However volumes are expected to stay thin and the markets fairly range bound as the massive storm hitting the US keeps Wall Street shut for another session. Investors will be watching closely to see if activity will be resumed tomorrow, the final day of the trading month.

UBS has announced that it is cutting 10,000 jobs worldwide, or 16% of its workforce over the next three years. This comes as the Swiss Bank posted larger than expected losses; however the plan unveiled to wind down its fixed income business and focus on its wealth management arm has pleased the market considerably. UBS has gained over 14% so far this week and is currently trading at a 15-month high. This transformation for the firm is expected to see overall earnings being less volatile, more consistent and of higher quality.

Here in the UK, BP reported forecast beating third quarter results, with a quarter on quarter increase in underlying replacement cost profit of $5.17 billion, up from $3.69 billion in the preceding quarter but down from the corresponding period of 2011. The quarterly dividend has also been hiked to 9 cents, up from 8 cents. This will help the oil giant to return to favour with pension fund managers after the troubles of the Gulf of Mexico oil disaster early last year. BP is currently leading the FTSE gainer board, up 5.2% by mid morning.

Economic data from Europe has also been keeping the markets entertained whilst Wall Street remains closed. Earlier this morning, Spanish GDP came in at -0.3% month on month, showing Spain’s economy is now 1.6% smaller than this time last year.

This news comes as the markets were digesting Spain’s massive drop in retail sales of 10.6% year on year in September and their record high unemployment at 25%. The troubled nation’s output has been shrinking for over 12 months and with the austerity measure yet to really kick in, the outlook for Spain is extremely poor. Despite this, Prime Minister Rajoy in a conference yesterday still denied the need for a bailout. The markets have been very patient with Spain but bond yields are starting to rise again so it looks like time might be starting to run out.