(MENAFN- AFP) European stock markets mostly rose Tuesday as investors snapped up bargains after the previous day's slump but London was lower following poorly-received British data, analysts said.
The euro traded around nine-year low points as investors wait to see what form of action the European Central Bank will take to stimulate the eurozone economy that is being undermined by sliding inflation.
London's benchmark FTSE 100 index shed 0.47 percent to stand at 6,387.06 points at about midday in the British capital.
Frankfurt's DAX 30 won 0.45 percent to 9,516.08 points and the CAC 40 in Paris gained 0.22 percent to 4,120.23.
European equities had tumbled Monday on renewed fears of a Greek exit from the eurozone and as the euro struck near nine-year lows against the dollar with the European Central Bank appearing on course to further prop up the single currency.
Europe's sharp losses were felt by US markets on Monday and across Asian indices Tuesday.
"Some traders considered yesterday's and today's losses as somewhat overdone," said Markus Huber, senior analyst at broker Peregrine & Black.
"The reason for London lagging a bit their European peers is that the services PMI for the UK came in quite a bit worse than expected," he told AFP.
Britain's services sector grew at its slowest rate for 19 months in December.
Huber added: "Also, eurozone markets appear to benefit from the fact that Greece is closed for trading today, taking some of the spotlight off Greece and the upcoming election later this month, although this is likely to be only temporary."
- Greece alert -
The first full week of the new year got off to a traumatic start for dealers as they bet that a January 25 general election in Greece would see a victory for the left-wing Syriza party.
Markets fear the party will roll back austerity measures required under the IMF-EU bailout of the country, which could in turn lead to Greece leaving the eurozone.
In foreign exchange Tuesday, the euro dropped to $1.1892 from $1.1933 late in New York on Monday. The single currency had begun the week by tumbling to $1.1864 -- the lowest level since March 2006.
Remarks by ECB chief Mario Draghi that deflation was a threat to the eurozone and that the ECB must be prepared to counter it caused the euro to slide in recent days.
The central bank has already used several tools to push inflation in the 19 countries sharing the euro back up to the 2.0 percent annual rate it regards as healthy, including asset purchases and making cheap loans available to banks.
It is also currently examining the possibility of large-scale purchases of sovereign debt, so-called "quantitative easing" or "QE", to help jump-start the eurozone economy.
- Bonds hit lows -
With the ECB primed to act, French and German borrowing rates reached new all-time lows on Tuesday amid fears over the prospect of Greece leaving the eurozone.
"It feels like we have moved full circle on the eurozone crisis as markets are yet again dominated by a potential exit from the euro area by Greece," said James Hughes, chief market analyst at Alpari trading group.
"After years of political fighting and billions of euros in bailout money it could be that we are closer to a Greek exit than we have ever been."
Market sentiment was being dragged down also by plunging oil prices, according to analysts.
"While in the medium to long term lower energy prices are positive for growth, in the short term many see the ongoing collapse in oil prices as a sign that economic growth, especially in the eurozone and China, won't recover anytime soon," said Huber.
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