European stocks mostly rise, euro up against dollar

In Paris, the CAC 40 rose 0.83 per cent to end the day at 3,890.65 points, while in Frankfurt the DAX gained 0.34 per cent to finish at 6,995.47 points.

But in London FTSE 100 index dipped 0.21 per cent in its first post-holiday trading session, dropping back below the 6,000 barrier to finish at 5,996.96 points.

The FTSE on Friday closed above the psychological 6,000-point level for the first time in 30 months thanks to a Christmas Eve rally.

"London's FTSE 100 went into the Christmas break on a resounding high," said trader Ben Critchley at IG Index.

"Before Friday, the FTSE hadn't closed above 6,000 since June 2008, and it will now be interesting to watch and see whether investors will want to take profits out of this latest surge, or dig in and set 6,000 as a base for further growth in 2011," he added.

Elsewhere in Europe, Swiss stocks were stable, Milan picked up 0.11, Lisbon rose 0.18 per cent, Brussels gained 0.74 per cent and Madrid climbed 0.79 per cent.

In Amsterdam the AEX index rose 0.46 per cent to hit a new high this year of 358.32 points.

On Wall Street, stocks continued to rise on Wednesday after blue chip stocks hit fresh two-year highs the previous day.

The Dow Jones Industrial Average was up 0.24 per cent to 11,603.88 at 1720 GMT.

The broader S&P 500 index gained 0.24 per cent to 1,261.51, while the tech-heavy NASDAQ rose 0.21 per cent to 2,668.57.

"The odds-on bet is that there will be more 'drifting' in the major averages during the day before things finally settle with a small gain," said Patrick O'Hare of Briefing.com pointing to past form.

Asian stock markets mostly rose on Wednesday as Shanghai shares started to recover from jitters caused by a weekend interest rate hike, while firm oil prices lifted energy stocks, traders said.

In foreign exchange trade, the euro jumped to $1.3173 at 1700 GMT from $1.3116 late on Tuesday in New York.

The dollar meanwhile fell to 81.94 yen from 82.43 yen late on Tuesday, while the British pound traded mixed.

"Today's currency movements will owe more to an illiquid market than they will to the ecostats," said analysts at Moneycorp.

The rise came as the European Central Bank said bank loans to the eurozone private sector increased further in November, a sign that the financial sector is slowly returning to normal despite the debt crisis.

"This is a welcome limited step in the right direction," noted IHS Global Insight's chief European economist Howard Archer.

"This raises hopes that eurozone banks may be becoming more willing to lend to what they perceive to be less risky businesses."

In London trading the euro changed hands at $1.3173 against $1.3116  late in New York on Tuesday, at 107.94 yen (108.11), 0.8525 pounds (0.8529) and 1.2510 Swiss francs (1.2486).

The dollar stood at 81.94 yen (82.43) and 0.9497 Swiss francs (0.9519).

The pound was at $1.5451 (1.5375).

On the bonds market, Italy launched a short- and medium-term bond issue worth 12 billion euros but had to offer sharply higher interest rates in the face of persistent concerns over eurozone public finances.

The yield, or the rate of return it must pay investors, on its 10-year bonds rose to 4.833 per cent on the secondary market on Wednesday evening, from 4.752 the evening before.

Yields on bonds from bailed-out Greece and Ireland rose as well, with 10-year Irish bonds climbing to 9.086 per cent from 9.039 per cent, and Greek 10-year bonds rising to 12.442 per cent, near the record of 12.465 per cent set in May.

Portugal, which said Wednesday it plans to raise six billion euros from the bond market in the first quarter of 2011, saw yields on its 10-year bonds rise to 6.664 per cent from 6.59 per cent.

The yield on Germany's 10-year Bund, the reference for the eurozone, rose to 3.018 per cent from 2.992 per cent and French bonds climbed to 3.400 per cent from 3.53 per cent.

Outside the eurozone, British 10-year Gilts were yielding 3.564 per cent against 3.509 per cent last Thursday.

Ten-year US treasuries were yielding 3.439 against 3.481 on Tuesday evening.