Europe open: Stocks edge higher, with Italy still in focus
European stocks edged higher in early trade as investors kept an eye on Italy, although trading was light as volumes tapered off ahead of the Christmas break.
At 0850 GMT, the benchmark Stoxx Europe 600 index was up 0.4%, Germany’s DAX was 0.2% firmer and France’s CAC 40 was up 0.3%. Italy’s FTSE MIB was up 0.8% amid reports the Italian government will seek parliamentary approval to borrow up to €20bn to support its banking sector and potentially rescue Banca Monte dei Paschi di Siena.
Reports suggested that if Monte dei Paschi is unable to arrange a private sector bailout, a state rescue may come as early as this week.
Meanwhile, oil prices were little changed, with West Texas Intermediate down 0.2% to $52.02 a barrel and Brent crude up 0.1% to $54.97.
Andy McLevey, head of dealing at stockbroker Interactive Investor, said: “Investor sentiment has been dampened by the tragic events in Berlin and Turkey and although we're not seeing any panic selling geopolitical tensions and terrorism fears will remain a threat to markets going forward."
On Monday, a truck ploughed into a Christmas market in Berlin, killing twelve people and injuring 48 in what is suspected to have been a terrorist attack.
In Turkey, the Russian ambassador was shot dead by an off-duty policeman who appeared to be protesting Russia’s involvement in Aleppo, while in Zurich, three people were injured in a gun attack at a mosque.
Market participants also mulled over policy announcements from the Bank of Japan and the Reserve Bank of Australia.
The BoJ kept its monetary policy unchanged on Tuesday, as expected, maintaining its target for a negative 0.1% interest on some excess reserves and the 0% 10-year government bond yield.
However, the BoJ sounded a more upbeat note on the economy, underpinning expectations that its next move will be a hike rather than a cut to interest rates.
Meanwhile, the Reserve Bank of Australia also stood pat on interest rates, as expected, at a historic low of 1.5%, and hinted that it was happy to keep rates where they are for the moment. The RBA stopped short of mentioning a recession but suggested the door was open to a rate cut in the New Year.
In corporate news, Lloyds Banking Group was in the black after announcing the acquisition of credit card business MBNA from Bank of America for £1.9bn.
Pharmaceutical giant GlaxoSmithKline was steady after saying it achieved positive results from a phase three HIV study, which assessed the efficiency of a two-drug regimen.
On the macroeconomic front, figures from Destatis showed producer prices in Germany rose more than expected last month.
Producer prices were up 0.3% in November from October and 0.1% higher on the year. The year-on-year change was the first positive annual rate of change since June 2013.
Economists had been expecting a 0.1% increase on the month and a 0.2% drop on the year.
Excluding energy prices, prices were up 0.3% on the month and 0.8% on the year. Energy prices rose 0.3% in November from the previous month but fell 1.7% from November last year.