European shares buoyed by rise in retail stocks
A rise in retail shares pushed up European equities on Tuesday, while expectations of new economic stimulus measures from the European Central Bank (ECB) also propped up stock markets.
German retailer Metro AG climbed 3 percent after it reported strong Christmas sales.
British supermarket operator Morrison also rose 5.6 percent as investors welcomed the departure of Morrison boss Dalton Philips, who had presided over weak Christmas trading figures.
The European energy sector underperformed as oil prices tumbled to their lowest levels in almost six years, but traders said this would help retailers as it theoretically would mean consumers would have more money to spend.
"The weaker oil price would put more money in consumers' pockets," said Andrea Williams, European equities fund manager at Royal London Asset Management.
Italy's FTSE MIB equity index rose 0.7 percent, helped by the country's borrowing costs reaching new record lows on speculation that the ECB could unveil plans for government bond purchases at a meeting next week.
However, some traders remained cautious about the Italian market given the imminent departure of Italian President Giorgio Napolitano.
"Italy is still in a phase of a very fragile economic recovery and the new president will have to play a key role to sustain the current coalition," said Carlo Alberto de Casa, senior analyst at ActivTrades.
Greece's benchmark ATG equity index also rose 1.9 percent with the country's election on Jan. 25 looming.
The leftist opposition Syriza party, which has said it will cancel austerity imposed under Greece's 240 billion euro ($283.3 billion) bailout and renegotiate some debts, is leading the polls, but some traders feel Greece will stay in the euro zone.
Rupert Welchman, European equities fund manager at Union Bancaire Privee, said that while he had reduced his holding of Greek shares, he did not want to be completely out of the Greek market in case it rallied after the Jan. 25 vote.
"During this long-running European crisis, we have been led to fear extreme outcomes time and again, and then the eventual outcome has been one of compromise," said Welchman.
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- January 13, 2015
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