Europe close: Utilities yield as investors ponder central banks' next moves

Weakness in the single currency drove further gains in shares on the Continent, helping to offset weakness in the Utilities space as bond yields advanced.

By the close of trading, the benchmark Stoxx 600 was 0.43% or 1.70 points higher at 400.11, alongside an advance of 0.13% or 17.81 points on the German Dax to 13,385.59 and a gain of 0.67% or 36.52 points for the Cac-40 to 5,523.94.

In parallel, euro/dollar was off by 0.41% to 1.1920, weighed down by an outsized fall of 0.82% in the single currency on its cross against the Japanese yen to hit 134.24, after the Bank of Japan reduced the size of its so-called reverse auctions, prompting some speculation of a move towards tighter policy.

The BoJ's decision also impacted on Bunds, helping to push yields up by four basis points to 0.47%. In turn, the Stoxx 600 Utilities yielded 0.94% to 295.97.

Commenting on the day's price moves, Chris Beauchamp at IG said: "Markets continue to make gains even as investors begin to consider the possibilities of more central bank tightening over the coming year and beyond. There are those wondering whether the BoJ’s moves overnight to ease back on bond purchases portends a bigger shift in global markets; if the world's most assiduous user of quantitative easing is itself easing back on the use of the proverbial punchbowl, will this mean that the others, especially the Fed and the ECB, will start to shift into a higher gear earlier than previously thought?

"At least it must be for the right reasons – only signs of real recovery would get the BoJ to move in the direction of tighter policy, and so for now stocks should remain the best way to play the global economic recovery."

Elsewhere on the economic front, German industrial output jumped by 3.4% month-on-month in November, according to the Ministry of Finance, almost doubling economists' projections for a rise of 1.8%.

That robust reading came alongside figures showing a sharp 4.1% jump in the country's exports for that same month, which boosted its foreign trade surplus to €22.3bn (consensus: €20.9bn).

Separately, figures from Eurostat revealed that the unemployment rate in the single currency bloc declined from 8.8% in October to 8.7% for November, as expected.

On the corporate side of things, and following a visit by French president Emmanuel Macron to China, multiple reports indicated that Airbus was set to ramp-up output of its jets in that country.

Further south, in Spain, on Monday evening that country's financial market regulator gave final clearance to Italian outfit Atlantia's proposed €15.6bn takeover bid for toll-road operator Abertis.