(MENAFN- AFP) Europe's main stock markets rose strongly on Monday in a renewed "Santa rally" powered by a modest recovery in oil prices early in the day, dealers said.
London's FTSE 100 index of leading shares rose 0.55 percent compared with Friday's close to stand at 6,581.38 points in afternoon trading.
Frankfurt's DAX 30 won 0.55 percent to 9,850.88 points and in Paris the CAC 40 climbed 0.15 percent to 4,248.09.
The euro rose to $1.2259 after sliding as low as $1.2220 in earlier Asian deals, matching Friday's two-year trough that was reached as the Federal Reserve signalled it may raise US interest rates in the middle of 2015.
"As the markets begin to wind down for Christmas, the Santa rally was still being felt ... with a quiet economic day ahead," said Spreadex trader Connor Campbell.
"After spending the last six weeks as the Scrooge of the economic world, oil has undergone a slight rejuvenation; in this current climate, any price above $60 per barrel for Brent crude oil is a signifier of hope for the markets."
Global oil prices rebounded slightly in early trading, with analysts predicting the sector has bottomed out after plunging by around 50 percent since June, but prices later turned down.
- Oil prices turn down -
London's Brent crude for February delivery shed 77 cents to $60.61 per barrel in afternoon trading, and US benchmark West Texas Intermediate (WTI) for February fell $1.00 at the opening of trade in New York to $56.13 a barrel.
Oil prices had rebounded on Friday, wiping out losses earlier last week that saw prices hit fresh five-year lows on the back of ample supplies and mounting demand worries.
Oil has however shed about half its value since June, and a decision in November by the Organization of Petroleum Exporting Countries (OPEC) to maintain output levels despite falling prices has weighed heavily on the market.
Stocks in oil companies tracked the changes in the price of crude.
In London, Tullow Oil stock fell 4.4 percent to 405.70 pence, while BP slid 0.08 percent to 412.65 pence.
French oil and gas giant Total shed 0.57 percent to 42.62 euros.
Falling oil prices hurt the energy sector because they erode company profits.
Trading volumes meanwhile remained low with many investors away from their desks for the traditional Christmas and New Year holiday shutdown.
The Frankfurt stock market closes for Christmas after the close on Tuesday, while London and Paris will shut down at lunchtime on Wednesday.
- Focus 'remains on oil' -
"As we head towards the Christmas break and a short week, the main focus going forward is likely to remain on the recent volatility in the oil price, particularly if we get a fresh bout of selling pressure," said CMC Markets analyst Michael Hewson.
He added there were widespread concerns that further oil market declines "could prompt instability in oil-producing countries like Venezuela, Angola, Nigeria and Ecuador, and of course not forgetting Russia, as these countries struggle to balance their books, against a weakening currency, and a much weaker oil price."
Elsewhere, Asian equities also rose in thin trade Monday amid the festive season, tracking cues from Wall Street where stocks had also surged in a Fed-fuelled "Santa Claus rally" last week.
Sydney soared 1.94 percent, Seoul gained 0.68 percent, Hong Kong climbed 1.26 percent and Shanghai was up 0.61 percent, while Tokyo closed flat.
Wall Street stocks opened mostly higher ahead of a heavy day of economic data releases Tuesday.
The Dow Jones Industrial Average rose 0.42 percent in the first five minutes of trading to 17,879.42 points.
The broad-based S&P 500 added 0.07 percent to 2,072.05, while the tech-rich Nasdaq Composite Index slipped 0.06 percent to 4,762.73.
Investors are looking ahead to Tuesday's economic reports, which include the third estimate of third-quarter gross domestic product and durable goods orders for November.
In Monday deals on the London Bullion Market, gold edged down to $1,195.25 per ounce from $1,195.50 on Friday.
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