European stock markets closed firmer yesterday, finding support in solid corporate news as investors kept close watch on sky-high oil prices ahead of an expected eurozone interest rate hike.
Dealers said the underlying tone was positive – the global economic recovery remains intact, with the United States picking up nicely, and that is enough to offset concerns over Middle East unrest and higher oil prices.
The markets appear to have fully discounted an expected European Central Bank rate hike to 1.25 per cent from the record low one per cent where they have been since May 2009 in an effort to bolster the economy.
Dealers said even the situation in Portugal, which looks increasingly likely to have to ask for an international bailout, also seems to have been priced in.
In London, the FTSE 100 index of leading shares closed up 0.57 per cent at 6,041.13 points. In Paris, the CAC 40 edged up 0.16 per cent to 4,048.16 points while in Frankfurt the DAX gained 0.55 per cent to 7,215.11 points
“The FTSE seems to be carrying on regardless even though oil remains firmly above $120 a barrel,” said Simon Denham at trading group Capital Spreads.
“Recent weeks have been a struggle for retailers in particular and the market is focusing on High Street bellwether Marks & Spencer who released the best news the sector has had for a while.”
M&S topped the gainers list, adding 5.10 per cent after the clothing-to-food retailer said group sales rose 2.3 per cent in its fourth quarter.
It was positive news for Britain’s retail sector as data showed industrial production slumped 1.2 per cent in February, the biggest amount for 18 months, denting hopes of a swift recovery for the faltering economy.
Investors in London were meanwhile awaiting the Bank of England’s latest monetary policy decision due today but most expect the BoE to keep its key lending rate at a record-low 0.50 per cent as weak growth offsets concerns over soaring inflation.
The European Central Bank, meanwhile, is expected to hike its key interest rate to 1.25 per cent from a record low one per cent today amid concerns that this could hurt struggling peripheral eurozone economies such as Portugal.
Elsewhere in Europe, Amsterdam put on 0.18 per cent, Brussels rose 0.50 per cent, Madrid jumped 1.56 per cent, Milan added 1.21 per cent and Swiss stocks edged up 0.20 per cent.