John Dance

FTSE edges higher into Christmas

European indices managed to post small gains in the last trading day before Christmas, positive momentum continuing from a raft of largely encouraging US economic data released yesterday. Whilst GDP was revised lower, weekly claims for jobless benefits came in below expectations and at a three and a half year low.

Despite good news in the form of Italian Prime Minister Mario Monti gaining approval for his austerity package, gains were modest as concerns over Europe are set to continue into the New Year. Reports suggested this morning that overnights deposits at the ECB hit a year high last night in a sign that banks prefer to park their cash with the central bank as opposed to lending it to other institutions in the market. The news came as Italian and Spanish bond yields crept higher, the former dangerously close to the 7% level.

The half trading day saw the FTSE 100 index close at 5512.7, a 1.0% gain for the day in what has been a relatively positive week in an otherwise volatile year.

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