Europe open: Stocks rise but Spain's IBEX slumps after inconclusive election

European stocks were in the black in early trade, shrugging off weaker oil prices at the start of what is likely to be a fairly quiet week, although Spanish markets bucked the trend following an inconclusive general election.

“European stocks are starting out the new trading week on a positive note, staging an early bounce despite heavy losses for the governing 'Popular Party' in the Spanish elections over the weekend,” said Markus Huber, senior analyst at Peregrine & Black.

“Besides positive 'seasonals' which favour markets going up during this time of the year news that the Chinese CIC (China Investment Corporation) is considering investing into German companies is giving stocks a major boost this morning.

“Overall sentiment is positive however it needs to be seen if markets can hold on to their gains especially with oil remaining weak which is likely to put US markets under pressure once again later in the day. Trading volume is expected to be on the light side, deteriorating further the closer we are getting to Christmas.”

At 0900 GMT, the benchmark Stoxx Europe 600 index was up 0.5%, Germany’s DAX was 1.2% higher and France’s CAC 40 was up 0.5%.

It was a very different picture in Spain, however, with the IBEX 35 down 2.2% and the yield on the country’s 10-year government bond up 18% basis points as the nation faced political uncertainty. Although Spain’s ruling conservatives won the general election, they lost their parliamentary majority, which means they could struggle to form a coalition.

“Spanish elections over the weekend may well have created a new headache for the region as support grew for anti-austerity parties which prevented the Conservative Popular Party from achieving a majority. In fact, they were so far from it that a coalition government led by them looks very unlikely at this stage,” said Craig Erlam, senior market analyst at Oanda.

Gains in equity markets came despite a backdrop of weakening oil prices, with West Texas Intermediate down 1% to $34.40 a barrel and Brent crude down 1.9% to $36.19.

In corporate news, ITV was a high riser in London following a press report over the weekend that Comcast’s TV and film arm NBCUniversal was considering an £11bn bid for the broadcaster.

Swedish telecom equipment maker Ericsson surged after settling a legal dispute with Apple over mobile-device patents.

On the macroeconomic front, data released earlier by the Federal Statistical Office showed German producer prices posted their sharpest annual drop in nearly six years in November.

Producer prices slipped 0.2% on the month and 2.5% compared with November last year.