European stocks withstand Greek political turmoil
European stock markets withstood political turmoil in Athens on Monday, closing higher despite losses earlier in the day after Greece failed to a elect a president and headed for snap polls.
While Europe`s main indexes recovered and gained ground, Athens stocks fell sharply, losing more than 11 percent after the failed presidential vote before closing down 3.91 percent.
At Monday`s close, London`s benchmark FTSE 100 index was up 0.36 percent at 6,633.51 points.
Mining stocks helped prop up the London index, with investors betting new economic measures in China would boost the country`s imports.
Frankfurt`s DAX 30 was essentially flat, up 0.05 percent to 9,927.13 points while in Paris the CAC 40 rose 0.51 percent to 4,317.93 points.
Analysts said the result of the Greek vote had affected markets, but not nearly as much as it would have a few years ago.
The snap poll has raised fears that the election could bring a radical left-wing party to power that would roll back austerity measures.
"The result, while not really unexpected, has spooked the markets, although not as much as it would have at the height of the eurozone crisis," Craig Erlam, market analyst at Alpari, wrote in a research note.
"As we can see from the reaction in the markets, investors are still worried about the risk of contagion, particularly when it comes to countries like Spain and Italy which are seen as being very fragile, but the risks are much lower than they were a few years ago."
Spain`s IBEX 35 index lost more than two percent in afternoon trading, but gained ground at the close, finishing down 0.84 percent. Milan`s MIB lost 1.15 percent.
At the same time, yields on 10-year bonds for Germany and France, seen as safe-haven investments, fell to historic lows. Germany`s dropped to a record 0.541 percent at one point in the day, while France`s had reached 0.828 percent.
Greek borrowing rates soared, with its 10-year yield climbing in the wake of the failed vote to 9.53 percent from 8.50 percent at Wednesday`s close.
In a further sign of the Greek vote`s limited impact however, the euro was down only slightly at $1.2177 compared with $1.2179 late in New York on Friday.
In recent days, European Commission President Jean-Claude Juncker and German Finance Minister Wolfgang Schaeuble have warned the Greeks not to change course and abandon the reforms.
The European Union and the International Monetary Fund have overseen two massive international bailouts for Greece. The IMF said it was suspending its aid to Greece until a new government is formed after elections.
Elsewhere on Monday, Russia`s government revealed that the country`s economy shrank in November for the first time in five years, as sliding oil prices and Western sanctions over Ukraine take their toll.
The economy ministry said gross domestic product for the month contracted by 0.5 percent year-on-year for the first time since October 2009.
The ruble fluctuated wildly earlier this month, with the central bank raising interest rates to 17 percent from 10.5 percent to prop up the currency and Russians snapping up imported goods ahead of expected price hikes.
Oil prices rose on Monday, pushed up by violence in crude producer Libya, but lost ground later in the day as concerns over a supply gut persisted.
By 1700 GMT, West Texas Intermediate for February delivery had lost 11 cents to $54.62 a barrel, while Brent North Sea crude for February slipped 28 cents to $59.17 compared to late Friday.
Daniel Ang, investment analyst at Phillip Futures in Singapore, said investors are showing concern as the "armed conflict in Libya is affecting crude oil flows".
Forces loyal to Libya`s internationally recognised government on Sunday carried out air strikes against Islamist militia following attacks on the country`s crucial Al-Sidra oil export terminal.
Oil prices have shed about half of their value since June owing to a production glut, weak global demand and a stronger US dollar, according to analysts.
On Wall Street, US stocks were mixed, with the Dow Jones Industrial Average at 18,052.66, down 0.01 percent.
The broad-based S&P 500 rose 0.12 percent to 2,091.37, while the tech-rich Nasdaq Composite Index added 0.08 percent at 4,810.65.
The British pound lost ground and was at 78.46 pence to one euro and $1.5520, while gold rose to $1,194 per ounce.