European stocks rally, dollar falls

LONDON: European stock markets rallied Wednesday, led by London which jumped more than two percent as traders reacted to a surge in oil prices.

Asian indices closed lower however as coronavirus fallout also dominated the direction of markets worldwide.

Bitcoin surged to a record peak at $35,841 as the world's most popular cryptocurrency extended its stellar rise on booming investor demand.

The dollar fell as US Democrats claimed the first of two key Senate election runoffs that edged them closer to taking control of both houses of Congress.

"A dual win should lead to... a weaker dollar as the fiscal situation would be seen as unsustainable," commented Sebastien Galy, of Nordea Investment in reference to the elections in Georgia.

Dealers believe that a double win for the Democrats would allow US President-elect Joe Biden to push through measures such as tax hikes and market regulations.

And while it could also pave the way for additional fiscal stimulus, some fear that would lead to higher inflation and raised interest rates.

Record low borrowing costs put in place by the Federal Reserve at the start of the Covid crisis have been a crucial driver of surging equity prices from their March lows.

Meanwhile, oil prices rose slightly after soaring by almost five percent Tuesday as Saudi Arabia offered to cut output by a million barrels in February and March.

The announcement sent WTI above $50 for the first time in 11 months, while shares in European oil major such as BP and Shell shot higher in reaction.

The move soothed worries about global demand, given that new lockdowns which could last months in some countries, were likely to stunt travel again.

A surge in Covid cases globally has forced several governments to reimpose lockdowns and other strict containment measures.

Analysts said that while new restrictions, worrying infection spikes and stuttering vaccine distribution in some countries were jangling nerves on trading floors, dealers were looking ahead to the second half of the year.

"Euphoria and dreams of the efficient distribution are now replaced with the unfortunate logistical rollout reality," remarked Axi strategist Stephen Innes.

"Markets will remain focused on the end of the tunnel, regardless of its length."

Key figures around 1200 GMT -

London - FTSE 100: UP 2.4 percent at 6,772.46 points

Frankfurt - DAX 30: UP 0.9 percent at 13,774.61

Paris - CAC 40: UP 0.8 percent at 5,610.13

EURO STOXX 50: UP 1.0 percent at 3,581.61

Tokyo - Nikkei 225: DOWN 0.4 percent at 27,055.94 (close)

Hong Kong - Hang Seng: UP 0.2 percent at 27,692.30 (close)

Shanghai - Composite: UP 0.6 percent at 3,550.88 (close)

New York - Dow: UP 0.6 percent at 30,391.60 (close)

Euro/dollar: UP at $1.2341 from $1.2294 at 2150 GMT

Dollar/yen: UP at 102.78 yen from 102.72 yen

Pound/dollar: UP at $1.3654 from $1.3622

Euro/pound: UP at 90.33 pence from 90.23 pence

West Texas Intermediate: UP 0.1 percent at $49.99 per barrel

Brent North Sea crude: UP 0.4 percent at $53.81 per barrel