European stocks rallied at the start of the year, while the euro slid against the dollar on persistent eurozone debt concerns and positioning ahead of the release of expected strong US economic data.
The Paris CAC 40 jumped more than two per cent in morning trading following reports of strong 2010 car sales, but at 1200 GMT was up 1.90 per cent to 3,876.94 points.
In Frankfurt the DAX 30 climbed 1.49 per cent to 7,017.44 points.
There was no trading in London due to the New Year holiday.
In France, shares in Renault were up 1.41 per cent to €44.115 and Peugeot Citroen PSA jumped 2.75 per cent to €29.190 after it was reported a strong 2.25 million new vehicles were registered in 2010.
Renault saw its new car registrations climb 4.2 per cent in the final year of state trade-in incentives on the back of a 70.9 per cent jump for its low-cost unit Dacia. New registrations of Renault brand vehicles slid 5.3 per cent.
Peugeot saw its sales increase 1.3 per cent.
Shares in German luxury sports car maker Porsche roared into the new year, gaining more than 11 per cent in early trading on Monday after a US lawsuit against the company was thrown out.
Porsche stock showed a gain of 11.30 per cent to €66.4 in over-the-counter trading in their first day the market was open since the ruling was announced.
Shares in Volkswagen, which is in the process of acquiring Porsche, leapt by 2.97 per cent to €125, to lead the DAX index of German blue chips which was 1.10 per cent higher overall.
On Thursday, the US District Court for the Southern District of New York granted Porsche’s motion to dismiss complaints brought by US hedge funds that had claimed more than $2 billion in damages over a failed 2008 attempt by Porsche to take over VW.
Meanwhile, on the forex market the euro opened the year down against the dollar.
At 1000 GMT the euro was trading at $1.3303 against 1.3381 late on Friday.
The dollar stood at ¥81.35 compared with ¥81.41 on Friday.
After a week of languid holiday trading on the currency markets with erratic movements, dealers were back in force.
“We’re returning to a normal situation,” said Nordine Naam, a strategist at Natixis Bank.
“There is a persistent mistrust of the peripheral eurozone countries due to the lack of a clear outlook on their public finances, which is not good at all for the euro,” said Mr Naam.
With both Spain and Portugal needing to tap the bond markets in the coming weeks, the eurozone will face a crucial moment of whether they will be able to raise funds at a sustainable cost.
“At what price will they be able to finance themselves compared to the other eurozone countries which are viewed as being solid? Such uncertainty is not good for the euro,” he added.
On the other hand, the dollar benefits from macroeconomic indicators that show the US economy is recovering, said Mr Naam, adding he expected the euro to drop to €1.30 in the short term.
The dollar was being boosted by expectations of a positive ISM Manufacturing Index reading due out later in the day in the United States.
Oil rose in electronic trading in Europe yesterday on expectations that an improving US economy will lead to higher demand for crude in the world’s biggest oil consumer, analysts said.
London markets were closed for the New Year holiday, but in electronic trading on the InterContinental Exchange (ICE) Brent North Sea crude for February was trading at $95.80 at 1100 GMT, a gain of $1.15 from Friday’s close.