European Markets Mostly Finished Higher Despite Energy Weakness

(RTTNews) - The majority of the European markets finished with modest gains Tuesday, extending their winning streak to a fourth consecutive session. However, the markets finished off their sessions highs, paring their early gains on the weakness of energy stocks. The price of a barrel of oil dropped back below $47 per barrel Tuesday.

The U.S. markets also returned to action, following yesterday's Martin Luther King Jr. holiday. The weak performance of the U.S. markets applied further pressure to the European markets in the afternoon.

Investor optimism for further quantitative easing measures from the ECB drove the European markets to multi-year highs Tuesday morning. The European Central Bank will hold its monetary policy meeting on Thursday.

French President François Hollande stated Monday that the monetary authority will take the decision to buy sovereign debt, which will provide significant liquidity to the European economy and create a movement that is favorable to growth.

The International Monetary Fund downgraded its global growth outlook as positive effects of lower oil prices and the depreciation of the euro and yen are more than offset by weakness in investment in many advanced and emerging market economies.

In its World Economic Outlook Update released Tuesday, the Washington-based lender said the global economy is set to grow 3.5 percent this year, down from the 3.8 percent expansion projected in October. The growth in 2016 is projected to be 3.7 percent instead of 4 percent.

Even with sharply lower oil prices, the economic outlook is still subdued weighed down by underlying weakness elsewhere, the IMF said.

Weaker investment prospects weighed on the euro area growth outlook. The outlook for 2015 was revised down to 1.2 percent from around 1.3 percent and that for 2016 to 1.4 percent from 1.7 percent.

The estimates for the U.K. were broadly unchanged from the previous projection. GDP is estimated to expand 2.7 percent in 2015 and 2.4 percent in 2016.

Falling oil prices and weak euro boosted German economic confidence to an 11-month high in January, survey results from the ZEW Centre for European Economic Research showed Tuesday. The indicator of economic sentiment rose sharply to 48.4 in January from 34.9 in December, the Mannheim-based institute said. The reading was forecast to rise to 40.

Germany's producer prices declined at the fastest pace since March 2010, data from Destatis showed Tuesday. Producer prices fell 1.7 percent year-on-year in December, the biggest fall since March 2010 when it declined 1.8 percent. Prices decreased for 17 consecutive months.

The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.63 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.80 percent.

The DAX of Germany increased by 0.14 percent and the CAC 40 of France rose by 1.16 percent. The FTSE 100 of the U.K. gained 0.52 percent and the SMI of Switzerland climbed by 0.32 percent.

In Frankfurt, SAP tumbled by 4.59 percent. The business software maker lowered its 2017 earnings target as it continues to push relentlessly toward a much more predictable business model.

Commerzbank climbed by 1.90 percent and Deutsche Bank added 1.10 percent.

Deutsche Lufthansa ended the session with a gain of 4.82 percent.

In Paris, Societe Generale increased by 4.26 percent. BNP Paribas rose by 5.41 percent and Credit Agricole advanced by 1.49 percent.

Shares of Technip fell by 1.18 percent, but Total finished higher by 1.20 percent.

In London, Royal Dutch Shell closed down by 0.19 percent. The oil giant will sell a stake in one of its crude-producing projects in the Campos Basin to Brazilian oil and gas company HRT Participacoes em Petroleo SA, the Bloomberg reported, citing two people familiar with matter.

Rio Tinto rose by 1.03 percent. The mining giant reported a 12 percent increase in global iron ore production for the fourth quarter, reflecting productivity improvements and the completion of ramp up of mining operations in the Pilbara region.

Royal Bank of Scotland climbed by 3.12 percent and Lloyds Banking gained 1.14 percent. Barclays also increased by 2.28 percent.

Unilever gained 0.27 percent in Amsterdam. The consumer goods giant reported lower than expected fourth-quarter underlying sales growth, citing slowing demand for its products in emerging markets.

Royal Philips climbed by 2.63 percent on a report that private equity firms KKR & Co. and CVC Capital Partners have a joint interest in the company's lighting unit.

Homebuilder confidence in the U.S. has seen a modest deterioration in the month of January, according to a report released by the National Association of Home Builders on Tuesday. The report said the NAHB/Wells Fargo Housing Market Index edged down to 57 in January from an upwardly revised 58 in December.

Economist had expected the housing market index to inch up to 58 from the 57 originally reported for the previous month.

The Chinese economy grew at the weakest pace since early 2009 in the fourth quarter, though the growth was more than the consensus estimate, data from the National Bureau of Statistics reported Tuesday. Gross domestic product, or GDP, grew 7.3 percent in the fourth quarter from a year ago, the same rate as in the third quarter.

This was the weakest growth since the first quarter of 2009. However, the growth was stronger than the 7.2 percent rise forecast by economists.