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updated: 12/27/2012 7:20 AM

European stocks up in thin trading

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  • A currency trader looks at the computer monitors near a screen showing the Korea Composite Stock Price Index (KOSPI), right, at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Thursday, Dec. 27, 2012. Most of Asian markets rose Thursday on optimism a new Japanese government will stimulate its sluggish economy. (AP Photo/Lee Jin-man)

      A currency trader looks at the computer monitors near a screen showing the Korea Composite Stock Price Index (KOSPI), right, at the foreign exchange dealing room of the Korea Exchange Bank headquarters in Seoul, South Korea, Thursday, Dec. 27, 2012. Most of Asian markets rose Thursday on optimism a new Japanese government will stimulate its sluggish economy. (AP Photo/Lee Jin-man)

 
Associated Press

MOSCOW -- European stocks edged up on Thursday as traders returned from the Christmas break anticipating progress from budget talks in Washington.

Britain's FTSE 100 added 0.2 percent to 5,966.55. Germany's DAX rose by 0.3 percent to 7,656.27 while France's CAC-40 was up by 0.4 percent to 3,669.74. Wall Street braced for a flat opening, with Dow Jones industrial futures marginally higher at 13,045. S&P 500 futures rose less than 0.1 percent at 1,413.90.

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Trading was sluggish early Thursday in the first day of trading following the break for Christmas as many investors are expected to remain on vacation at least until next week.

"Trading volumes across all markets will of course remain quite subdued, as most market participants in Europe and the U.S. are on vacation until next Wednesday and those that are at work are decidedly lacking in holiday cheer," Moscow-based investment bank Sberbank CIB said in note to investors.

Investors are eagerly waiting for news from Washington where U.S. President Barack Obama was to resume budget talks with Congress after cutting short his Hawaii vacation. The negotiations aim to avoid the so-called "fiscal cliff" -- deep budget cuts and tax hikes that would kick in on Jan. 1 unless the White House and Congress agree on a budget deal. Congressional officials, however, said Wednesday they knew of no significant strides toward a compromise over a long Christmas weekend.

On Wednesday, U.S. stocks fell for a third session as trading resumed after the Christmas break. Disappointing holiday sales weighed heavy on retail companies and investors worried about the impending fiscal cliff. Wall Street is set to open up slightly, with stock index futures for the Dow Jones industrial average and the S&P 500 both up around 0.1 percent.

Asian stocks on Thursday pushed higher with Japan leading the way. The country's benchmark index hit its highest level in more than a year on optimism that a new government in Japan will stimulate the country's sluggish economy.

Tokyo's benchmark Nikkei 225 index rose 0.9 percent to close at 10,322.98, its highest finish since March 2011. That added to Wednesday's 1.5 percent gain and took the Nikkei to a 22 percent increase for the year. Hong Kong's Hang Seng gained 0.4 percent. South Korea's Kospi added nearly 0.3 percent. Benchmarks in Singapore, Taiwan and Australia also posted gains.

Incoming Japanese Prime Minister Shinzo Abe has called for more public works spending to reinvigorate the economy. He wants the Bank of Japan to raise its inflation target from 1 to 2 percent to drag the country out of two decades of deflation, or steadily declining prices that have deadened economic activity.

"The message from Japan is clear at the moment, the incoming government will do everything in its power to weaken the yen and stimulate the economy," Australia's IG Markets said in a report.

In China, shares lost ground, with the Shanghai Composite Index falling 0.6 percent while the Shenzhen Composite Index lost 0.8 percent.

Benchmark oil for February delivery edged up 2 cents to $90.99 in electronic trading on the New York Mercantile Exchange. The contract jumped $2.37 to finish at $90.98 per barrel in thin post-Christmas trading in New York.

In currencies, the euro rose to $1.3269 from $1.3220 late Wednesday in New York. The dollar gained to 85.74 yen from 85.63 yen.

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Pamela Sampson in Bangkok and Fu Ting in Shanghai contributed to this report.

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