LONDON: European stock markets rose yesterday after a deal was agreed in Germany to form a coalition government, while investors drew strength from mostly upbeat company news and US data.
London’s benchmark FTSE 100 index added 0.20 percent to close at 6,649.47 points, and the CAC 40 in Paris rose 0.36 percent to 4,293.06 points. Frankfurt’s DAX 30 climbed 0.66 percent to 9,351.13 points to set a new record close above the 9,300 level.
The euro rallied to an October peak of $1.3613, but fell back to $1.3565, down slightly from $1.3570 late in New York on Tuesday.
The euro also jumped as high as 138.79 yen — the highest level since June 2009. It later stood at 138.60 yen compared with 137.43 yen on Tuesday.
The dollar rose to 102.19 yen from 101.26 on Tuesday. The British pound rose to 1.1992 euros and $1.6268.
Ending two months of uncertainty, German Chancellor Angela Merkel yesterday agreed to form a coalition government with rivals the Social Democrats, after her conservatives won elections but fell short of a full majority.
Dealers are also looking to eurozone inflation this week for clues about whether the ECB will launch further easing measures.
The bank cut rates to a record-low 0.25 percent this month in response to deflationary fears in the eurozone after October inflation sunk to a four-year-low of 0.7 percent.
On Friday, markets will digest crucial November eurozone inflation data that could shed fresh light on the outlook.
“The test of the ECB’s reaction function (and the next leg for the euro) will come this week when we get November inflation,” Credit Agricole analysts said.
In Wednesday deals on the London Bullion Market, the price of gold slid to $1,245 an ounce from $1,247.50 on Tuesday.
US stocks moved higher despite mixed economic data on the eve of the Thanksgiving holiday. The Dow Jones Industrial Average advanced 0.20 percent to 16,104.65 points, while the broad-based S&P 500 added 0.29 percent to 1,807.93 and the tech-rich Nasdaq Composite Index rose 0.53 percent to 4093.23.
The gains came despite a disappointing report on durable goods, which dipped 2 percent in October due to a big drop in transportation orders and a decline of 0.1 percent outside of transportation.
Meanwhile, first-time claims for US unemployment benefits fell 10,000 last week to 316,000. However, analysts cautioned that the data are difficult to seasonally adjust for, in light of the lateness of this year’s Thanksgiving holiday.
Asian markets were mixed in quiet trade, with Tokyo slipping 0.42 percent, Sydney easing 0.45 percent while Seoul ended up 0.31 percent.
Shanghai added 0.82 percent while Hong Kong climbed 0.53 percent, with investors unfazed by US bombers challenging China’s newly declared air defence identification zone.
In European equity trading, shares in British catering firm Compass rose 1.3 percent to 938.5 pence after announcing that it will return £500m cash to shareholders, despite falling annual net earnings.
In Paris, Vivendi shares gained 0.9 percent to ¤18.76 after management approved Tuesday a plan to spin off its Internet and mobile phone unit SFR to allow the French company to focus on media and content.
On the downside, French hotel group Accor saw its shares tumble 7.5 percent to ¤31.05, with investors unconvinced by the company’s plan to reorganise the company into distinct hotel and real estate arms. AFP
