European stocks climb as investment rules take effect

4 January, 2018 12:00 AM printer

LONDON: Europe's major stock markets rose Wednesday but gains were tempered as new investment regulations were rolled out across the region.

Investors have kicked off 2018 in buoyant mood as the world economy stirs to life and job creation, particularly in the United States, picks up, reports AFP.

World equity markets fizzed higher Tuesday on growing investor optimism, with the exception of key European markets, but some analysts cautioned over the outlook for the rest of the year.

Europe rose Wednesday despite the introduction of so-called MiFID II rules, which seek to tighten financial market regulation to stop rampant speculation.

The regulations, unveiled in 2011 at the height of the eurozone debt crisis and in the wake of the global economic meltdown, aim to curb speculative trading in commodities and to regulate high-frequency trading to protect investors.

"With MiFID regulation beginning in Europe today many expect a somewhat subdued trading session," noted AxiTrader analyst James Hughes.

"MiFID is something that many financial firms have been working on for months, so I do not see a big change in behaviour for today's session," he cautioned.

In a new twist on Wednesday, British markets regulator the Financial Conduct Authority and German counterpart BaFin have both granted the complex derivatives market another 30 months to comply with MiFID II reforms.

Wednesday's climb followed another record-breaking session on Wall Street.

Frankfurt and Paris stocks each added 0.3 percent in value.

London trod 0.1 percent higher, with clothing retailer Next boosted by news of bumper Christmas sales.

Asia was given another strong lead from Wall Street where technology titans Apple, Amazon and Google-parent Alphabet were the standout performers.

The tech-rich Nasdaq and the S&P 500 ended at all-time highs while the Dow ended just shy of a new record.

In foreign exchange activity on Wednesday, the dollar recovered somewhat against the euro following its recent poor form.

The European single currency had jumped Tuesday to a four-month high at $1.2081.

"Euro/dollar has eased off ... after a smashing start for this year," added ThinkMarkets analyst Naeem Aslam.

"The rally is primarily pumped by the optimism that the eurozone's economy is performing well and the European Central Bank would stay on track to finish its ultra-loose monetary policy this year."

Elsewhere, oil prices edged higher, having briefly hit 2.5-year peaks the previous day on geopolitical concerns in key crude producer Iran.