European stocks ended higher despite paring gains in late trading, and futures rose amid investor optimism that a weaker-than-forecast inflation report bolstered the case for the European Central Bank to begin quantitative easing.
The Stoxx Europe 600 Index added 0.5 per cent to 333.2 at the close, after earlier rising as much as 1.2 per cent. The gauge was boosted by data showing the euro-area inflation rate fell below zero for the first time in more than five years.
In Dublin, the Iseq Overall Index declined by 0.24 per cent to 5,073.83. Figures published by the Irish Stock Exchange yesterday showed that the Iseq rose by 15.09 per cent in 2014 as a whole.
Shares in Aer Lingus declined by 1.1 per cent yesterday in spite of the airline reporting a 3 per cent increase in traffic last year to 11 million passengers. Rival Ryanair closed down 1 per cent at €9.575, having enjoyed a strong run of late.
It was a bad day for some of the more established players on the Irish market. Food group Glanbia finished 3.2 per cent lower at €12.365, bookmaker Paddy Power was weaker for the second day in a row after recent broker downgrades – off 2 per cent at €62.53 – while drinks company C&C was 0.7 per cent off at €3.631.
One trader said this reflected a move by some investors away from defensive stocks to growth companies.
Futures on the Euro Stoxx 50 Index expiring in March jumped 1.3 per cent. "The market is bouncing a bit on increased optimism of QE," said James Buckley, who helps oversee around $48 billion as a portfolio manager at Baring Asset Management Ltd in London. "A deflationary print gives more ammunition for those who are seeking QE."
The European equity gauge is still down 5.1 per cent from an almost seven-year high reached last month, amid a slump in oil-and-gas companies and growing concern over Greece as prime minister Antonis Samaras said this month's election could lead to the nation exiting the euro zone. The ASE Index fell 1.5 per cent today, extending its lowest close since 2012.
Sweden’s OMX Index slid 2.3 per cent, for the biggest drop, after reopening following a holiday.
UK stocks gained to snap their longest losing streak in three weeks as Marks & Spencer Group rose ahead of figures on Christmas trading due Thursday. The retailer climbed 1.9 per cent after three days of losses and the biggest slump in three years earlier this week.
Grocer J Sainsbury fell 2.1 per cent; Boohoo.com slumped 42 per cent; bigger rival Asos fell 6.6 per cent.
The FTSE 100 Index rose 53.32 points, or 1.9 per cent, to 6,419.83 at the close in London. The benchmark gauge has dropped every day this year following its first December decline since 2002. The broader FTSE All-Share Index gained 0.8 per cent.
The Standard & Poor‘s 500 Index rose the most in three weeks in early trading, halting a five-day slump, as data stoked optimism on growth and Germany signalled more flexibility on Greek debt payments.
The S&P 500 Index added 1.2 per cent to 2,025.58 at 12:39pm in New York, before minutes from the Federal Reserve’s latest meeting.
The benchmark gauge plunged 4.2 per cent in five days and fell 2.7 per cent for the worst start to a year since 2008.
The Dow Jones Industrial Average climbed 190.73 points, or 1.1 per cent, to 17,562.37.
Healthcare and consumer shares had the biggest gains, rising at least 1.5 per cent. Energy stocks rose 0.6 per cent, rebounding from a 5.3 per cent tumble over the previous two days. West Texas Intermediate oil climbed 1.9 per cent. Brent earlier slipped below $50 a barrel for the first time since May 2009. – Additional reporting by Bloomberg