FTSE 100, European stock markets rise

London's benchmark index gained 0.3% to end at 7,465 points, while the CAC advanced 1.2% in Paris, and the Frankfurt DAX added 0.7% despite uneven sectorial performances

The FTSE 100 and European stock markets managed to recover some of its losses on Thursday after a heavy red day the session before. This was due to heightened expectations that interest rates will be reduced later than previously hoped as UK and European inflation increased in December.

London's benchmark index gained 0.3% to end at 7,465 points, while the CAC advanced 1.2% in Paris, and the Frankfurt DAX added 0.7% despite uneven sectorial performances.

European markets posted their third consecutive daily decline as markets continued their New Year hangover, after the pre-Christmas euphoria of what was perceived as a December rate pivot from the Fed, Michael Hewson of CMC Markets said.

The FTSE 100 had its worst day since August slipping to its lowest levels since late November, dragged down by a combination of poor performance from real estate, basic resources and energy after weak Chinese economic data, and the prospect of rate reductions getting pushed further into 2024.

In the last few days, we have seen a concerted effort from assorted central bankers in Europe, as well as the US to dial back the expectation of early rate reductions, while a surprise rise in UK inflation and some strong US retail sales data torpedoed the idea that we would see early rate cuts in March, he added.

In the US, stocks tipped higher, eyeing a bounce back from recent losses as investors looked to fresh quarterly earnings for inspiration amid dwindling hopes for an early 2024 interest rate cut.

The S&P 500 gained nearly 0.4%, while the tech-heavy Nasdaq Composite led gains, adding 1%. The Dow Jones Industrial Average shed around 0.3%.