European stocks end mostly in positive territory

​​​​​​​By Mucahithan Avcioglu

ISTANBUL (AA) - European stocks closed higher on the second trading day of the week, with the exception of Italy, as investors expect an economic recovery later this year despite geopolitical uncertainties.

The pan-European Stoxx 600 index rose 0.58%, or 3.52 points, to close at 605.28.

Germany's DAX 40 index was up 0.09% to end at a record 24,892.2 points, while the UK's FTSE 100 climbed 1.18% to also end at a new all-time high of 10,122.73.

France's CAC 40 rose 0.32% to 8,237.43, and Spain's IBEX 35 gained 0.19% to end the day at a record high of 17,647.1 points.

On the other hand, Italy's FTSE MIB index fell 0.2% to close at 45,753.43 points.

Geopolitical developments dominated the markets, with the US intervention in Venezuela during the weekend and the capture of President Nicolas Maduro leading to increased geopolitical tensions.

Analysts stated that geopolitical developments create a unique uncertainty for financial markets, and given Venezuela's significant oil reserves, investors are closely monitoring the reaction of energy prices and the resulting inflation expectations. They pointed out that if geopolitical instability increases, it could reduce investor risk appetite in the short term. But they noted that if sanctions are lifted following a change of power in Venezuela and oil reserves are made available to the market more efficiently, energy prices and consequently inflation are likely to fall.

Analysts added that it would allow the US Federal Reserve to cut interest rates more sharply than previously planned, and equity markets are currently pricing in that expectation of monetary easing.

On the data side, the annual inflation in Germany eased more than markets expected to 1.8% in December, down from 2.3% in November.