European stock indexes rise, markets upbeat on limited Omicron emissions

European stock indexes rose slightly on Wednesday, with markets optimistic that the Omicron coronavirus variant will have only limited economic impact, even as the number of cases worldwide has risen sharply and more countries have announced restrictions.

Europe's STOXX 600 index was up 0.1% at 08:57 GMT and the MSCI world stock index, which tracks stocks in 50 countries, was also up 0.1%. Asian stocks generally rose amid low year-end liquidity.

But London's FTSE 100 fell 0.2% and Wall Street futures were down.

There were small gains in Europe even after Germany, Scotland, Ireland, Portugal, the Netherlands and South Korea reintroduced blockchain or other restrictions on activity in recent days.

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"Each successive blockade seems to have been less severe in terms of economic impact than the previous ones. I think this is partly because there has been more adjustment in the economy," said Arnab Das, global market strategist at Invesco.

Das said that this time the markets are not giving up hope.

"Maybe the restrictions will not be as severe, comprehensive and long term as in 2020 and 2021," he added.

The World Health Organisation's chief scientist said on Monday that it would be "unwise" to conclude from early evidence that Omicron was a milder option than previous ones.

A study by Imperial College London also found that the Omicron variant showed no indication that it was milder than the Delta variant.

Meanwhile, US President Joe Biden warned Americans of the deadly risks of non-vaccination and invited military personnel to support overcrowded hospitals.

Currency market movements were generally muted due to a slowdown in trading ahead of the Christmas holidays. The US dollar index rose slightly, rising 0.1% on the day to 96.547, while the euro fell 0.2%.

The Australian dollar, often seen as an indicator of risk appetite, was slightly lower at $0.7149.

The Turkish currency was again highly volatile as traders perceived measures proposed by President Tayyip Erdogan and the Turkish central bank to protect local currency savings from just such fluctuations. The indicator for expected volatility jumped to the highest level ever observed.

German Bund yields hovered around three-week highs amid improving risk sentiment on equity markets, while hawkish comments from the European Central Bank also helped.

Gas prices in Europe hit a new record high after the main pipeline for Russian gas flowing into Europe reversed eastwards. Oil prices remained stable.

Some Western politicians and industry experts have accused Russia of suspending gas supplies to Europe amid political tensions over Ukraine, as well as delays in certifying another pipeline, Nord Stream 2. Russia denies any connection.

Investors will pay attention to any sudden increase in tensions between Russia and Ukraine over the Christmas period, Das of Invesco said.

Russia rejects accusations from Ukraine and the US that it may be preparing to invade Ukraine as early as next month with tens of thousands of Russian troops within reach of the border.

Elsewhere, cryptocurrencies rose slightly, with bitcoin up 0.7 per cent to $49,273.32, still well below the record high of $69,000 reached in November.