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Europe close: Stocks, euro jump after breatkthrough in German coalition talks
Stocks on the Continent fared well at the end of the week as the two main German parties achieved a breakthough in negotiations to form a grand coalition after a marathon 24 hours of talks, boosting asset prices across the single currency bloc.
By the closing bell, the benchmark Stoxx 600 was 0.31% or 1.24 points higher to 398.49, alongside a rise of 0.32% or 42.13 points to 13,245.03 for the German Dax and an advance of 0.52% or 28.51 points to 5,517.06 on the Cac-40.
Those gains materialised even in the face of a powerful move higher for the single currency, which tacked on 0.93% to stand at 1.2154 against the US dollar at the end of the session.
Early on Friday, it was announced that German Chancellor Angela Merkel's conservative Christian Democratic Union bloc and the Social Democrats had agreed to a blueprint for formal coalition negotiations.
But some analysts cautioned that a deal was not yet guaranteed.
According to Chris Scicluna and Mantas Vanagas at Daiwa Capital Markets, "opposition within the SPD to any future cooperation with Merkel should not be underestimated. So, even under the assumption that SPD delegates vote next weekend to give a green light to formal negotiations, we might yet see more drama unfolding in German politics over coming weeks. And it appears unlikely that a new government will be in place before Easter."
Any deal between the two parties would also have to pass a vote by all party members, the two analysts pointed out.
Elsewhere on the economic front, industrial production in Italy was unchanged in November, ISTAT reported, and 2.2% higher versus the year-ago level.
In parallel, INSEE revised down a preliminary estimate for harmonised consumer prices in France during December to a gain of 0.4% on the month and 1.2% in annual terms.
The preliminary estimate had been an advance of 1.3%.
In corporate news, Volkswagen shares traded on the front foot even after the carmaker's finance chief, Frank Witter, announced the firm was expecting cash outflows of between four and five billion euros in 2019 in the wwake of the dieselgate emissions cheating scandal.