European shares kicked off the new year by hitting a 15-month high.
However only low volumes were being bought and sold with many investors still on holiday.
Those traders that were around were encouraged by the fact that the US manufacturing sector grew for a fifth straight month in December and Chinese manufacturing rose by the most in five years.
But Rüdiger Born, of Avantus Traders in Frankfurt, said it cannot go on forever: “I think there’s a big possibility of a setback. We’ve had big gains in the last nine months and now is the time for consolidation. That isn’t going to happen immediately, but we have to be aware of a downside trend later in the year. So, let’s be cautious.”
Across Europe, energy companies benefited from a more than two percent rise in the cost of crude oil caused by a weaker dollar and a pricing dispute between Russia and Belarus.
Banks were the top gainers and mining companies’ shares were in demand as metals prices advanced.
The euro was boosted by upbeat euro zone manufacturing data.