Wednesday, December 28, 2011

European shares inch higher in early trade

PARIS (Dec 28): European stocks inched higher in early trade on Wednesday, barely keeping their year-end rally alive, with fresh worries over the euro zone debt crisis and Iran's threat to stop the flow of oil through the Strait of Hormuz capping gains.

At 0805 GMT, the FTSEurofirst 300 index of top European shares was up 0.1 percent at 991.11 points.

Despite the recent massive liquidity injection by the European Central Bank, banks still appear to distrust each other and prefer to deposit their money at the ECB's overnight facility than lend to each other.

Latest figures show banks deposited 412 billion euros ($538.3 billion) at the central bank. Emergency overnight borrowing also remained high at above 6 billion euros.

"This really highlights the reluctance banks have to lend to each other and they would rather take a small loss than go to the inter-bank market," IG Markets dealer Chris Weston said. - Reuters

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