European shares dragged down by weak commodity prices

European stock markets are up, helped by gains in the banking sector, although weaker mining share prices have curbed the progress of the British market.

The pan-European FTSEurofirst 300 index fell 0.5 percent, while the euro zone’s blue-chip Euro STOXX 50 index declined by 0.6 percent, both surrendering ground after rising in the previous session.

Britain’s blue-chip FTSE 100 index, opening for the first time since the Christmas break, rose 1 per cent.

The fall in oil prices has been a major driver of financial markets this year, hammering energy companies, lowering inflation expectations and reinforcing bets on loose monetary policy in Europe and a slow tightening in the United States.

Trading volumes are expected to be thin, with many markets due to shut earlier than usual for the New Year holiday. An oil price rebound yesterday buoyed many global markets – particularly those heavily exposed to commodities – with some nice USA data helping the cause further’.

In Europe, where the European Central Bank is pumping more than a trillion euros into the economy, stocks were down 0.2 percent on Thursday but on track for a 7 percent gain on the year. Analysts had been expecting the EIA to report a drop in stockpiles. “There’s not much incentive to hold bonds, and the U.S.is at the tail-end of a bull run, so it’s hard to justify putting your money there”.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS were effectively unchanged, and looked set for a loss of around 12 percent for the year. The JPX-Nikkei Index 400 edged up 0.2 percent to 13,951.93.

Connor Campbell, at Spreadex, said: ‘After an energised start to the week on Tuesday things are looking far more sluggish this morning, the European indices all tipping back into the red as Wednesday got underway’.

Meanwhile, shares of sports retailers Adidas were up 1.3 percent.

While U.S. stocks (.SPX) are just off record highs, they rose only 0.2 percent this year but are tipped for growth next year of around 6 percent.

Other markets in the region were also mostly lower. The Environment Agency said Britain had faced an extraordinary period of severe weather and flooding in December, with consultants PwC warning that the latest deluge from Storm Frank could take total losses above 3 billion pounds ($4.5 billion).