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Europe ends higher as commodities recover; ECB meeting eyed

European stocks closed mostly higher on Wednesday, as investors eyed the fluctuation in commodity stocks, ahead of this week's European Central Bank policy meeting.

Oil in focus

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The pan-European Stoxx 600 index finished up some 0.5 percent provisionally, with most sectors closing higher. London's FTSE ended 0.3 percent higher, while its European counterparts, the French CAC and German DAX finished up 0.5 and 0.3 percent respectively.

One factor influencing global market sentiment was the fluctuating prices in oil. Prices initially came under pressure due to a strong U.S. dollar and slowing demand concerns; however prices rose, after the Energy Information Administration reported that crude stocks had increased by 3.9 million barrels in the last week, in line with analysts' estimates.

At Europe's close, Brent and U.S. crude both rose sharply, up over 3 percent, last standing at $41 and $38.12 respectively. Stocks in the sector ended mostly higher, with Tullow Oil and Shell posting strong gains. Seadrill however tanked almost 17 percent.

A recovery in metal prices helped boost miners on Wednesday, following a sharp tumble on Tuesday, which saw the Basic Resources slip over 9 percent on worse-than-expected trade data out of China. Glencore close up 2.5 percent, with BHP Billiton also closing higher. ArcelorMittal however slipped over 1.5 percent by Europe's close.

In Asia, most markets stumbled to close mixed on Wednesday as analysts pointed to renewed concerns over China's economy following its recent lower-than-expected trade data. U.S. stocks traded mostly higher at Europe's close, supported by a recovery in oil prices.

Prudential jumps; Restaurant Group tanks

Insurance giant, Prudential saw its 2015 operating profit rise 22 percent, to £4.01 billion ($5.69 billion), and announced that it had hiked its dividend in its latest earnings report. Shares reacted positively, up some 2.9 percent. This boosted other firms in the sector, including Unipol and Generali.

Restaurant Group tumbled to the bottom of benchmarks, off over 22 percent after the firm said it would struggle to add sales in 2016, on the back of a softening in consumer demand.

Shares of Deutsche Post slipped 1.7 percent despite the express delivery firm reported that earnings before interest and tax (EBIT) reached 957 million euros ($105 million) in the fourth quarter, against the average analyst expectation in a Reuters poll for 943 million euros.

VW closes higher

Elsewhere, shares of German utility company E.ON slipped over 3 percent after reporting a net loss in 2015 of 7 billion euros, more than double the 3.1 billion euros reported in 2014.

Fashion retailer Inditex saw its share price jump over 1.5 percent after it booked a 15 percent rise in 2015 net profit.

Meanwhile, shares of Volkswagen reversed earlier sharp losses, to close higher. This comes following a report that the U.S. Justice Department sent the German automaker a subpoena under a bank fraud law in its diesel emissions probe, a person briefed on the matter told Reuters on on Tuesday.

All eyes on ECB

Investors remain cautious ahead of Thursday, when all eyes will be on the European Central Bank's March meeting. Investors hope its president, Mario Draghi will take action, with some analysts suggesting a possible further cut in the deposit rate, while others expect quantitative easing to be extended or expanded.

"Mario Draghi's credibility will be seriously damaged if the ECB does not opt for further monetary easing this week. The last time he gave strong hints that action was imminent was ahead of December's meeting, when he was unable to persuade the ECB to go along with him," said director of manager research at Morningstar UK, Jeremy Beckwith.

Ahead of the ECB meeting, European banks finished trade mixed, with Societe Generale and Intesa Sanpaolo, both closing higher.