New Year, new high for euro zone stock markets
By Jemima Kelly
LONDON (Reuters) - Euro zone stocks opened 2017 by climbing to their highest in more than a year on Monday after data showed manufacturers in the currency bloc ramped up activity at the fastest pace in more than five years.
With all of Asia's major markets closed for the New Year holiday - along with Britain and Switzerland in Europe - trade was thin, which could cause some volatility. The United States and Canada will also be closed.
The euro zone's blue-chip Euro STOXX 50 index rose half a percent to its highest since December 2015 after the purchasing managers' index (PMI) for factories in the currency bloc came in at 54.9 - well above the 50 mark that separates growth from contraction.
The euro, though, took no comfort from the figures, slipping 0.4 percent back below $1.05 after climbing to as high as $1.07 during a flash surge in low trading volumes in Asia on Friday.
Analysts said the fall was mainly due to a resumption of an up-trend in the greenback that saw it surge to 14-year highs in December on the view the U.S. Federal Reserve will hike rates as many as three times this year, and that Donald Trump's administration will stoke growth and inflation with a program of fiscal expansion.
The dollar index - which measures the greenback against six major rivals - climbed half a percent, having hit a two-week low on Friday.
"In the last days of 2016 we saw the dollar retreat somewhat, and there might be some sense of a correction from Europe this morning. I don't see any fundamental drivers for the moves," said Commerzbank currency strategist Esther Reichelt, in Frankfurt.
Italy's top share index hit its highest level since January last year, outperforming other major European stock indexes, with a rally in its banks and a strong manufacturing report improving sentiment. Continued...