European Stocks Trim December Decline in Shortened Trading Day

By Inyoung Hwang

European stocks advanced, trimming their first December decline since 2008 amid low equity volume.
The Stoxx Europe 600 Index rose 0.3 percent to 342.17 at 11:25 a.m. in London, with the volume of shares changing hands being 79 percent below the 30-day average. The gauge has slipped 1.5 percent this month amid a slump in energy producers and in Greek equities as Prime Minister Antonis Samaras failed to get enough backing for his presidential candidate, leading to early elections.
“The drop in oil added much more volatility to markets,” said Louis de Fels, a Paris-based fund manager at Raymond James Financial Inc., which oversees about $53 billion. “But we’re confident in European equities in 2015. We expect there’ll be fewer geopolitical problems next year. Also, lower oil will help consumption in Europe, the U.S. and China. This is quite good news for 2015 global growth.”
Stoxx 600 retailers and financial-services companies are
gaining the most today, up 0.8 percent. Royal Ahold NV and Tesco Plc added more than 1.4 percent. Hargreaves Lansdown Plc and Man Group Plc rose more than 2 percent.
France’s CAC 40 Index (CAC) and Ireland’s ISEQ Index climbed more than 0.5 percent, the most among western-European markets open today.
Trading on the London Stock Exchange will end at 12:30 p.m. local time, and NYSE Euronext’s European cash markets will close 35 minutes later. The Madrid bourse will stop trading at 2 p.m. local time. Exchanges in Germany, Switzerland, Italy and the Nordic countries are closed.

Annual Advance

This month’s drop takes the Stoxx 600 gain for the year to 4.3 percent. That contrasts with the U.S., where the Standard & Poor’s 500 Index, Dow Jones Industrial Average and Russell 2000 Index climbed to records in recent days, while the Nasdaq Composite Index reached its highest level since March 2000.
While it’s a third year of gains for the Stoxx 600, 4.3 percent is its smallest increase since 1992. Strategists forecast more advances in 2015.
After falling to this year’s low in October, the benchmark gauge rebounded 13 percent to an almost seven-year high on Dec. 5. It then retreated to a two-month low amid a slump in oil prices and political turmoil in Greece. In the week ended Dec. 12, the Stoxx 600 slumped 5.8 percent, the most in three years, as Greece’s ASE Index (ASE) posted its biggest plunge since 1987.

Greek Slump

The Greek gauge sank more than 15 percent this month, the most since June 2013. Samaras’s failure revived concern over the European currency union and European Central Bank stimulus plans. The nation will have elections almost 18 months before the prime minister’s term was due to end. The benchmark gauge has lost 30 percent this year, becoming the world’s worst equity market after Russia.
At stake in next month’s ballot is the international lifeline that has kept Greece afloat since 2010, as opposition party Syriza vows to abandon the reforms that Samaras has pursued in return for bailout aid. It also aims to renegotiate Greek debt held by euro area member states and the ECB.
The concerns have pushed lower national benchmark equity indexes of Europe’s periphery. Italy’s FTSE MIB Index (FTSEMIB) fell 5 percent in December, Portugal’s PSI 20 Index lost 7.5 percent and Spain’s IBEX 35 Index dropped 4.5 percent. The Spanish gauge is still up 3.7 percent for the year, while the Portuguese index is down 27 percent and the Italian one is little changed.
Germany’s DAX Index (DAX), which also fell in December, rose 2.7 percent in 2014 for a third annual gain. France’s CAC 40 slipped 0.6 percent this year, while the U.K.’s FTSE 100 Index retreated 2.7 percent.
With a 21 percent surge, Denmark’s OMX Copenhagen 20 Index is the best performing among 24 developed-market gauges this year.