European Markets End Higher on Bargain Hunting
European stock markets ended a volatile week with a slight rally Friday, as investors sought bargains in banking and other battered stocks.
The market is "very jittery, but cautious investors are buying on the dips," Max Asmelash from JN Financial told CNBC.com. "There are good opportunities in banking stocks," he added.
Shares such as Barclays made firm gains ahead of the close, having been sold off during the session, and the uncertain stock moves looked set to remain a feature in the near term.
"It often takes 2-3 months to get through these periods of nervousness," Karen Olney from Merril Lynch, told "European Closing Bell."
Markets had been lower after inflation data in the U.S. showed consumer prices jumped a bigger-than-expected 0.8 percent in November, the sharpest climb in more than two years, driven by surging energy costs.
Fed May Still Ease
But the data was mostly due to unfavorable comparisons with last year, and investors were quickly reassured that it would not affect future monetary policy decisions from the Federal Reserve.
"This will not keep the Fed from easing further, should market conditions warrant it," ING Bank analyst Rob Carnell wrote in a market note.
Euro Zone inflation data came in slightly higher than previously estimated, adding to the outlook that the European Central Bank would hold interest rates for the near term.
November final inflation in euro zone was 3.1 percent, higher than the "below but close to" 2 percent target inflation stated by the ECB and a fraction above a previously reported 3 percent.
Today's market direction is "all linked to inflation," Emmanuel Cau, European equity strategist at JP Morgan told CNBC.com.
"European inflation was a little bit higher, but I don't think that would come as big surprise to the market, because French inflation was higher yesterday," Cau added.
Oil producing stocks gained as the price of a barrel of oil regained some of the previous day's losses. Royal Dutch Shell ended 1.3 percent higher.
Another stock doing well on the FTSE-100 was troubled bank Northern Rock, which jumped at the open and closed 7 percent higher, as investment group Olivant stayed in the race to take over the bank, Reuters reported citing sources familiar with the situation.
Also in the banking sector, shares in HSBC were 1 percent higher after the UK bank said it was the successful bidder for failed lenderThe Chinese Bank.
HSBC said it will receive $1.5 billion in Taiwan government funds and make a cash infusion of up to $400 million into the bank.
Also, Moody's announced it put the ratings of Bradford & Bingley on review for possible downgrade because the conditions in the British mortgage market have worsened.
The bank's growing reliance on wholesale funding and the impact on its profitability from possible higher funding costs were among the factors that could lead to a downgrade, the ratings agency said in a statement.
Bradford & Bingley shares were over 0.8 percent higher on bargain hunting.
Centrica Profit on Line
Staying in the UK, shares in Centrica rose after the energy company said its market had become more challenging due to rising wholesale gas prices, but its underlying year profit would be broadly in line.
And online betting company PartyGaming managed to shrug off its ban on online betting in the US to release fourth-quarter earnings in-line with expectations.
Lufthansa was among the top gainers on the DAX after the airline bought a 19 percent stake in U.S. low-cost carrier JetBlue for 205 million euros.
European financial stocks were lower after US banking giant Citigroup unveiled plans to assume control of seven structured investment vehicles it advises, putting $49 billion in a support fund. As a result, Moody's Investors Service cut its debt rating on the company.
And the market will also be looking at politics as European Union leaders meet after the signing of the new EU Treaty.