European stocks rise at end of tough year

People skate on a rink set up under the glass-roofed central hall of the Grand Palais in Paris.

LONDON - Europe's main stock markets rose on Wednesday, the last trading day of a tough year for the region's equities against a backdrop of weak eurozone growth.

London's benchmark FTSE 100 gained 0.29 per cent to 6,565.90 points nearing the end of a shorter-than-normal trading day on New Year's Eve, while the index was set to show a loss of nearly 3.0 per cent over the year.

London has been dragged down in recent months by plunging oil prices owing to the FTSE featuring a number of heavyweight energy companies, notably Shell and BP. Economic strains in China have additionally hit the index's mining groups.

"The economic picture materialising out of China has seen a continuing cooling of its economy, not down to levels of Western nations but sufficiently low to see commodity stocks do some serious rescaling of their future expectations," said Alastair McCaig, market analyst at IG trading group.

Elsewhere in thin trading on Wednesday, the CAC 40 in Paris climbed by 0.58 per cent to 4,270.36 points nearing the finish.

Dealing on Frankfurt's DAX 30 ended for the year on Tuesday, with the index rising by a modest 2.65 per cent in 2014 amid sluggish growth in Germany, Europe's biggest economy.

On Wednesday, the euro edged up to $1.2157 from $1.2154 late in New York on Tuesday.

"We expect the euro to head down further to a low of $1.15 in 2015 after weakening to a 28-month low of $1.213 in late-December from a 30-month high of $1.399 in early May," said Howard Archer, chief European economist at IHS Global Insight, in a note to clients.

"It is very possible that the euro could weaken further still if the political situation in Greece leads to serious doubts about its eurozone membership."

Greece's parliament was dissolved Wednesday ahead of a snap election warily watched by markets and international creditors concerned that the austerity-weary country could begin to undo fiscal reforms.

"As we look into 2015, the picture is clouded by Greek elections that threaten to reignite the eurozone crisis, while there seems no end in sight to the rout in oil prices," added McCaig.

Markets in recent months have been hit by plunging crude oil prices and the Russia-Ukraine crisis, while support has come from the expanding US economy.

"Unlike its European brethren, bar a few wobbles, the US markets had a spectacular 2014, as they consistently hit new record highs in the second half of the year," noted Connor Campbell, analyst at Spreadex traders.

"This especially was true of the Dow Jones, which went on an unprecedented run of gains."