Europe close: Stocks rebound from Friday's selloff but oil prices tumble

European equity markets gained ground on Monday, as investors analysed dovish comments from European Central Bank President Mario Draghi and got to grips with the prospect of a Federal Reserve rate hike this month.

The benchmark Stoxx Europe 600 index closed up 0.50%, while Germany’s DAX rose 1.25% and France’s CAC 40 climbed 0.88%.

As of 1643 GMT, the euro was down against the main currencies. The European currency fell 0.32% and 0.28% against the dollar and the yen respectively and lost 0.13% against the pound, while Brent crude slumped close to a six-year low in the wake of Friday’s OPEC meeting and was down 4.32% to $41.22 a barrel.

“With OPEC seeming less and less like a cartel and more like an audience with the Saudis, it is likely crude prices could fall further yet,” said IG’s market analyst Joshua Mahony.

ECB reassures investors

Last Friday’s better-than-expected US jobs report all but paved the way for the Federal Reserve to hike interest rates for the first time in almost a decade.

Meanwhile, investors were reassured by comments from European Central Bank chief Mario Draghi, who said last week that quantitative easing was unlimited.

“There’s been a sense of reassessment rather than panic,” said CMC Markets’ analyst Jasper Lawler.

“There is clearly still a stark divergence between European and US monetary policy.

“The ECB’s under-action has so far just meant a quick readjustment over the size of the divergence.”

On the macroeconomic front, the forward-looking Sentix investor confidence index for December rose to 15.7 from 15.1, although it fell short of expectations for a reading of 17.

Figures released earlier showed industrial production in Germany grew 0.2% month-on-month in October, missing forecasts for a 0.8% rise.

Total output excluding energy and construction increased by 0.7%, led by a 2.7% month-on-month jump in the production of capital goods, while that of intermediate and consumer goods declined by 1.1% and 0.1%, respectively.

In company news, Saint-Gobain gained 1.46% after the French building materials group received anti-trust approval from all the relevant authorities to buy Switzerland’s Sika AG.

Elsewhere, pharmaceutical company Novartis edged 0.70% higher following positive results for a leukaemia treatment drug.

On the downside, shares in Electrolux tumbled 15.07% after its agreement to buy General Electric’s appliance business fell through.