London and Frankfurt stocks firmed yesterday but Paris fell into the red, dented by forecasts of a recession, while sentiment was clouded by possible rating downgrades for eurozone countries.
Clouds of recession hang in the background, with the latest warning from the French statistics office that France is heading for mild recession at the end of the year.
Meanwhile France pointed at what it said was the worrying state of the British economy.
Market analysts are still pondering the economic and political implications of a decision by Britain a week ago to stand aside from a new European Union architecture to tighten budget discipline.
But Poland, winding up its term as EU president, said that Britain would send experts to eurozone talks at the end of the month on new regulations.
In Italy, crisis austerity measures put forward by the government of Mario Monti passed a vote of confidence in parliament.
London’s FTSE 100 benchmark index added 0.53 per cent to 5,429.91 points and Frankfurt’s DAX 30 gained 0.07 per cent to 5,734.43 points.
In Paris, the CAC 40 index fell 0.14 per cent to 2,994.69, after the official forecast that the French economy will fall into a brief recession in the final quarter of this year and the first quarter of 2012.
The European single currency advanced to $1.3036, compared with $1.3017 late in New York on Thursday.
Asian shares also followed Wall Street higher yesterday as strong US data on jobs and manufacturing and a successful Spanish bond auction the previous day tempered concerns about the eurozone debt crisis.
“A confident, but tentative, open for European markets as investors continued a reignited Christmas rally following positive data from the US yesterday, defying the notion of a European contagion diluting gl-obal growth as well as tracking Asian gains overnight,” said Spreadex trader Shavaz Dhalla.
Wall Street posted encouraging gains yesterday, aided by positive data on the US jobs market, industrial activity and trade, but eurozone clouds continued to hover over the markets.
In particular, traders remained cautious as they awaited Standard & Poor’s potential credit downgrade of 15 eurozone member countries – including France and Germany – while the IMF warned of a miserable outlook for the global economy.