AFP: European stocks, euro buoyed by German coalition deal
London — European stock markets and the euro rose Wednesday after a deal was agreed in Germany to form a coalition government, while investors drew strength from mostly upbeat company news.
The single currency also advanced as speculation mounted over further easing by the European Central Bank (ECB), dealers said.
But investors remain cautious ahead of a flurry of key US data before Thursday's Thanksgiving holiday. Jobless claims, durable goods orders and consumer sentiment are all due.
In early afternoon deals, London's FTSE 100 index rose 0.09 percent to 6,642.14 points, helped by confirmation that Britain's economy grew by 0.8 percent in the third quarter.
Elsewhere, Frankfurt's DAX 30 added 0.27 percent to 9,314.94 points and in Paris the CAC 40 won 0.30 percent to 4,290.32 compared with Tuesday's close.
The euro rallied to an October peak of $1.3613, up from $1.3570 late in New York on Tuesday. It also jumped to 138.53 yen -- the highest level since August 2009 -- compared with 137.43 yen on Tuesday.
Ending two months of uncertainty, German Chancellor Angela Merkel Wednesday agreed to form a coalition government with rivals the Social Democrats, after her conservatives won elections but fell short of a full majority.
"European indices are trading higher across the board on Wednesday, following an encouraging morning in Germany that saw a coalition agreed between the two largest parties and consumer confidence hit levels not seen since September 2007," said Alpari analyst Craig Erlam.
Merkel's Christian Democratic Union (CDU), their Bavarian allies the CSU and the centre-left Social Democratic Party (SPD) held 17 hours of marathon talks before bleary-eyed party leaders delivered the deal before dawn.
Dealers are also looking to eurozone inflation this week for clues about whether the ECB will launch further easing measures.
The bank cut rates to a record-low 0.25 percent this month in response to deflationary fears in the eurozone after October inflation sunk to a four-year-low of 0.7 percent.
On Friday, markets will digest crucial November eurozone inflation data that could shed fresh light on the outlook.
"The test of the ECB's reaction function (and the next leg for the euro) will come this week when we get November inflation," Credit Agricole analysts said.
The dollar was also under pressure after a gauge of US consumer confidence tumbled in November to its lowest level since April.
In London on Wednesday, British catering firm Compass topped the risers board after announcing that it will return £500 million ($815 million, 600 million euros) cash to shareholders, despite falling annual net earnings.
The group's share price rallied 2.91 percent to 953.5 pence after Compass also hiked its full-year dividend to 24 pence from 21.3 pence last time around.
In Paris, Vivendi shares gained 1.83 percent to 18.935 euros after management approved Tuesday a plan to spin off its Internet and mobile phone unit SFR to allow the French company to focus on media and content.
On the downside, French hotel group Accor saw its shares slide 3.46 percent to 32.4 euros, with investors unconvinced by the company's plan to reorganise the company into distinct hotel and real estate arms.
In Wednesday deals on the London Bullion Market, the price of gold edged up to $1,251.78 an ounce from $1,247.50 on Tuesday.
