(MENAFN- Gulf Times) Europe's leading stock markets gained yesterday, winning a boost from German data and expectations of ECB stimulus, as investors
also await key elections in Greece.
London's FTSE 100 index closed up 0.52% to 6,620.10 points, as investors looked ahead to a meeting of the European Central Bank
(ECB) tomorrow with the markets now firmly expecting it will begin a sovereign bond-buying programme.
Frankfurt's DAX 30 index hit a new record close, climbing 0.14% to 10,257.13 points, and the CAC 40 in Paris rose 1.16% to end
the day at 4,446.02 points.
The euro retreated to $1.1568 from $1.1606 late in New York on Monday as traders nervously awaited a close weekend election in
Greece, where an anti-austerity party is leading in opinion polls.
Investment sentiment in Germany rose for the third month in a row in January, shrugging off the market turmoil sparked by the
Greek political crisis and the Swiss franc shock, a survey found yesterday.
The widely watched investor confidence index calculated by the ZEW economic institute jumped 13.5 points to 48.4 points in
January, its highest level in 11 months.
"January's rise in ZEW investor sentiment suggests that confidence in the German economy is holding up well despite fears for
Greece," said Jennifer McKeown, senior European economist at consultants Capital Economics.
"Presumably any worries about the effect of the Greek crisis on the German economy were offset by expectations of ECB
quantitative easing and hopes of a boost to exports from the weakening euro," she added.
Stock indices have risen since late last week on fresh signals that the ECB will launch a bond-buying stimulus programme, known
as quantitative easing or QE, at its monetary policy meeting tomorrow, news that has weighed heavily on the euro.
QE expectations have also been fuelled by concerns over the chronically low level of inflation across the single currency bloc
and fears that the region could slip into deflation € a sustained and widespread drop in prices.
While falling prices may sound good for consumers, deflation can trigger a vicious spiral in which businesses and households
delay purchases, throttling demand and causing companies to lay off workers.
In Greece meanwhile, the country will never recover without a generous debt cut, the politician likely to become the next finance
minister said yesterday.
"To promote reforms one must settle the debt issue," Giannis Dragasakis, the senior economist at anti-austerity party Syriza
which is favoured to win Sunday's general election, told AFP in an interview.
Syriza, which has a steady lead of around three percentage points in pre-election polls, is trying to strike a delicate balance
between fiscal diligence and debt forgiveness.
The left-wing party's plan to renegotiate Greece's multibillion bailout with the European Union and the International Monetary
Fund is already raising hackles among the country's creditors.
IMF chief Christine Lagarde on Monday warned of "consequences" if European countries try to renegotiate their debts.
Wall Street markets fell in early trade yesterday, as investors dumped oilfield stocks after a further decline in crude prices.
Around mid-day in New York, the Dow Jones Industrial Average fell 0.72% to 17,385.03 points.
The broad-based S&P 500 dropped 1.32% to 1,992.67 points, while the tech-rich Nasdaq Composite gave up 0.51% to stand at 4,610.54
An employee at the State Central Bank in Hanover, northern Germany, holding a bunch of euro notes. The euro retreated to $1.1568
from $1.1606 late in New York on Monday.
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