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Global stocks mixed as Germany faces period of political limbo

·3-min read
The prospect of long coalition talks in Germany is weighing on the euro (AFP/Sebastian Gollnow)

European stock markets ended the day slightly higher Monday, after an early rally ran out of steam as the prospect of drawn-out coalition talks in Germany weighed on sentiment.

On the other side of the Atlantic, share prices on Wall Street were also mixed as investors weigh the risk of a US government shutdown amid difficult congressional negotiations on President Joe Biden's agenda.

Brent oil prices jumped close to a three-year high just short of $80 a barrel on concerns about tightening supplies, boosting shares in energy companies.

After earlier surging by as much as 0.5 percent, the blue-chip DAX index in Frankfurt ended the day 0.3 percent higher.

Europe's biggest economy could be headed for weeks, if not months, of political uncertainty, with protracted coalition haggling looming as Chancellor Angela Merkel's conservatives insisted on trying to form a government even after losing to the Social Democrats in a tight race.

The London and Paris stock markets also pared early gains to end the session 0.2 percent higher.

Back on Wall Street, financial and energy equities enjoyed strong gains, even as two of the three major indices finished the session in the red.

"It's been an interesting start to the week as equity markets made strong gains early in the day before giving most back as the morning wore on," said OANDA analyst Craig Erlam.

"Despite the relative comfort surrounding a probable coalition of moderate parties, the current uncertainty and the protracted nature of forming a new government has contributed to the euro taking minor losses against other major currencies," said MoneyCorp analysts in a note to investors.

Investors also kept a nervous eye on developments in the crisis at troubled Chinese property giant Evergrande as it teeters on the brink and threatens contagion.

- 'Up for a nasty shock'

"There seems to be a strange complacency in the markets, with investors choosing to ignore the mounting risks that are appearing -- whether that be Evergrande, slower growth, higher inflation, hawkish central banks, energy crises, to name some," OANDA's Erlam told AFP.

He said for the moment a fear of missing out meant investors were buying on any dips.

"We're seeing markets paring early gains as the session proceeds but if this mentality persists, I fear investors may be setting themselves up for a nasty shock," the analyst warned.

London stocks were dampened by an ongoing shortage of petrol or gasoline that has been sparked by panic-buying at fuel stops across Britain.

- Key figures around 2050 GMT -

New York - Dow: UP 0.2 percent at 34,869.37 (close)

New York - S&P 500: DOWN 0.3 percent at 4,443.11 (close)

New York - Nasdaq: DOWN 0.5 percent at 14,969.97 (close)

Frankfurt - DAX: UP 0.3 percent at 15,573.88 points (close)

London - FTSE 100: UP 0.2 percent at 7,063.40 (close)

Paris - CAC 40: UP 0.2 percent at 6,650.91 (close)

EURO STOXX 50: UP 0.2 percent at 4,165.48 (close)

Tokyo - Nikkei 225: FLAT at 30,240.06 (close)

Hong Kong - Hang Seng Index: UP 0.1 percent at 24,208.78 (close)

Shanghai - Composite: DOWN 0.8 percent at 3,582.83 (close)

Euro/dollar: DOWN at $1.1700 from $1.1720 at 2100 GMT on Friday

Pound/dollar: UP at $1.3704 from $1.3679

Euro/pound: DOWN at 85.35 pence from 85.68 pence

Dollar/yen: UP at 110.01 yen from 110.73 yen

Brent North Sea crude: UP 1.8 percent at $79.53 per barrel

West Texas Intermediate: UP 2.0 percent at $75.45 per barrel

burs-jmb/caw

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