Paris at year's high as European stocks extend gains

Paris at year's high as European stocks extend gains

European markets pushed higher on Tuesday as Paris stocks reached the year's highest level and Italian banks surged, while oil prices weighed on Wall Street.

LONDON: European markets pushed higher on Tuesday (Dec 6) as Paris stocks reached the year's highest level and Italian banks surged, while oil prices weighed on Wall Street.

Traders have registered little reaction to Italian Prime Minister Matteo Renzi's defeat in Sunday's referendum and subsequent resignation in the wake of recent shock votes in Britain and the United States.

2016 has already witnessed a wave of anti-establishment populism, which saw Britain vote for its EU exit and the United States elect Donald Trump.

"If neither Brexit nor a vision of Donald Trump in the White House could convince traders to dump shares, it's hardly surprising a 'no' vote in the Italian referendum failed to dent investor confidence," said Lee Wild, head of equity strategy at stockbroker Interactive Investor.

The euro held above US$1.07, having crashed on Monday to a 20-month low at US$1.0506.

Eurozone indices were also lifted by confirmation that the eurozone economy grew by 0.3 per cent in the third quarter.

Shrugging off the uncertainty over Italy's political future, France's CAC 40 closed the day at a record high for the year.

"Investors believe that the referendum is not threatening eurozone fundamentals," said Daniel Larrouturou at Diamant Bleu Gestion.

"The feeling is that there won't be early elections in Italy, so that political problem is now out of the way," added Francoise Rochette, head of asset management at Mandarine Gestion.

Frankfurt's DAX also closed up, partly influenced by a ruling from Germany's Constitutional Court that energy companies have a right to compensation after the government ordered the shutdown of the country's nuclear power plants in the wake of the 2011 Fukushima disaster.

And Milan's benchmark FTSE MIB shares also soared, continuing the previous day's run. The index closed more than four percent higher, as banking stocks surged, led by a 12.8-per cent gain for UniCredit.

London stocks were also higher after a brief stumble earlier over jitters surrounding an ongoing legal challenge to Britain's Jun 23 referendum decision.


"Considering the FTSE MIB has bucked the overall up trend in stock markets and has fallen 22 per cent so far this year, you could argue that an adverse outcome from the referendum was already priced in," noted City Index analyst Kathleen Brooks.

"Markets would be wise not to get too complacent about political risks."

Traders also took the news in their stride partly because Renzi's departure will be delayed by a final task, passing a budget, in a move expected by the end of the week.

Attention is shifting to the US Federal Reserve's expected interest rate rise next week, with traders hoping it will give some indication of its plans for 2017 as US President-elect Trump embarks on a big-spending programme that will likely fan inflation.

On Wall Street, petroleum-linked shares pulled back on lower oil prices as a rally after last week's OPEC meeting showed signs of fatigue, and the Dow retreated slightly from its record close.

Source: AFP/de