Europe close: France and Italy lead gains as global consumer spending rises

The main European equity benchmarks held on to modest gains by the close, following strong US growth data and a mixed bag of economic data in the continent.

The FTSE 100 closed 0.33% higher at 6,598.18 points, while in Paris the Cac-40 finished 1.42% higher at 4,314.97 and Milan's FTSE Mibtel rose 1.46% to 19,352.13.

A strong boost came from outside the continent as US gross domestic product (GDP) accelerated to an annualised 5% over the three months ending in September, comfortably ahead of the 3.9% last estimated and the average projection from economists for an increase of 4.3%.

This jump was driven by consumer spending and was another piece of evidence to demonstrate the catalytic power lower oil prices to the global economy.

Mixed data from Europe included France's statistics office print of domestic household consumption to growth of 0.4% over the month in November, an increase after the fall of 0.8% in October, but slightly less than forecasts.

In Spain, the central bank estimated that economy would grow at a 2% clip in 2015.

UK mortgage approvals fell to an 18-month low in November, the fifth monthly decline in a row. Data from the British Bankers Association (BBA) showed the number of approvals was down 19.5% year-on-year.

Beware Greeks?

The gains came despite potentially disruptive news from Greece as Prime Minister Antonis Samaras failed to garner enough support for his presidential candidate in a second round of voting.

Greek parliamentarians will now be called on to vote for a third and final time on 29 December and if Samaras fails again he will be forced to into snap elections in February, which might have an unsettling effect on global financial markets, especially if a coalition led by left-wing Syriza party wins power, as looks increasingly likely.

Analyst Holger Schmieding at Berenberg guesstimated a "65% probability" of new parliamentary elections, leaving 35% for parliament to elect a president on 29 December, allowing the current government to continue until late 2015, and a "55% probability" that, in case of new elections, Syriza would win them versus "45% that a new government would still be led by Samaras’ centre-right".

But he said this would not trouble the Eurozone as it had done previously.

"A Greek accident has become a potent risk again. But mostly for Greece itself. The Eurozone now has a well-oiled machinery to deal with crises. With its ESM support fund and a readiness of the ECB to do what it takes to contain contagion risks, the Eurozone could probably handle an unlikely but not impossible Greek accident with no more than very limited and temporary damage."

Corporates

Meanwhile in the corporate arena, ratings agency Standard & Poor's lowered its outlook on the long-term debt issued by the likes of Royal Dutch Shell and BP to 'negative' late on Monday. S&P cited a “dramatic deterioration” in the outlook for the price of oil.

The Wall Street Journal reported French lender Societe Generale may have to push back its profitability targets in Russia by several years as a result of that country's economic troubles.

The best performing industrial sectors within the DJ Stoxx 600 were: construction (1.02%), retail (0.75%) and utilities (0.62%).

The euro/dollar was essentially unchanged, off by 0.02% to 1.2227.

Front month Brent crude futures were advancing 0.98% to $60.71 per barrel on the ICE.