consumer spending cheer

European shares are higher on Tuesday with sentiment supported by merger activity and a bounce in the price of oil after it touched 11-year lows. Volumes are thinning out in the shortened holiday-week so choppy price moves are likely as markets over-react then quickly retrace.

The oil price is seeing some short-covering after Brent crude hit a fresh eleven year low on Monday and before API oil inventories are reported later. Sentiment towards oil has gotten overly bearish in the past week on essentially no new information so there is some scope for a rebound, especially if inventories see a drawdown.

A takeover by Japanese employment agency Recruit of Dutch staffing firm USG People and a merger between finish software company Innofactor and Sweden’s Cinteros offered a welcome distraction.

The euro and British pound were both slightly higher after data for Germany and the UK showed an increase in consumer confidence in December. The confidence data would be welcome news for British retailers during the critical holiday shopping season but separate data from the CBI showed retail sales volumes were slower than expected. The combined effect of Black Friday, online shopping and a warm winter is a triple headache for retailers trying to flog their winter wares.

US stocks look set for a flat open in signs that traders have already clocked out for the holidays ahead of the final release of US third quarter GDP. The data is expected to show US growth was slightly slower than previously calculated at 1.9% y/y from 2.1%.