European stock markets brought a grim year to a close Tuesday, extending their gains into a second day as commodities rallied, although dealers said the future for equities remained clouded.
“Many may quietly hope for a brighter outlook in 2009, though all the pointers remain somewhat depr-essed . . . and it would take an eternal optimist to assume we’re going to see a quick rebound,” Jimmy Yates, a dealer at CMC Markets, said.
Resource stocks remained in focus.
Volumes were thin with economic and corporate news ebbing to a trickle as markets closed for the new year holiday.
Germany opened for a half-day session Tuesday while most markets in Europe are closed Wednesday or only open for the morning.
The pan-European FTSE Eurofirst 300 rose 1.7 per cent to 824.47 while Germany’s Xetra Dax rose 2.2 per cent to 4,810.20 and, in Paris, the CAC 40 gained 2.8 per cent to 3,217.13.
European shares have lost almost half their value this year and are down 4½ per cent this month alone.
Less than 10 of the Eurofirst’s top 300 stocks ended the year higher than they began it.
Banking stocks were hit hard. The Eurofirst 300 banking index has lost 65 per cent of its value since the start of the year.
However, banks bounced Tuesday with Credit Suisse adding 2.2 per cent to SFr28.50, leaving its annual slide at almost 60 per cent.
The bank said it had received a business permit from Chinese regulators to launch a joint venture with Founder Securities that will sponsor and underwrite shares and bonds in China.
Swiss peer UBS rose 2.7 per cent to SFr14.8 but tumbled 68 per cent over the year.
Commerzbank rose 2.2 per cent to €6.64 while Franco-Belgian financial Dexia rose 3.9 per cent to €2.90 in a year that has seen both banks shave more than 75 per cent off their value.
Oil shares shrugged off lower crude prices and extended their previous day’s rally, with France’s Total rising 2.9 per cent to €39.20, Austria’s OMV up 3.4 per cent to €18.72 and Norway’s StatoilHydro rising 0.7 per cent to NKr113.90.
Portugal’s Galp Energia rose 0.8 per cent to €7.30.
Metals stocks gleamed, with German steelmakers Salzgitter and ThyssenKrupp up 5.6 per cent to €55 and 2.5 per cent to €18.96 respectively while, in France, ArcelorMittal rose 3.5 per cent to €17.30.
The Eurofirst industrial metals index has lost 50 per cent this year as China’s economy has slowed sharply while Europe and the US have slid into recession, knocking demand for raw materials.
Pharmaceuticals rallied Tuesday, bringing the defensive sector’s gains for the year to almost 17 per cent as investors sought a port in stormy seas.
Switzerland’s Novartis rose 1 per cent to SFr52.70 and Roche was flat at SFr162.50 while, in France, Sanofi-Aventis edged up 1.8 per cent to €45.75.
“European and global investors are heavily overweight the defensives like healthcare, food and beverage, and utilities,” Karen Olney, European equity strategist at Merrill Lynch, said.
Utilities powered higher with Germany’s RWE up 1.7 per cent to €63.70 after announcing that it had secured grid connection rights for a new nuclear power station in north Wales.
Rival Eon was up 3.9 per cent to €28.44 while, in France, GDF Suez rose 4.7 per cent to €32.35 and Finland’s Fortum rose 5.6 per cent to €15.2.
