Greece lags steady European shares on election worries

European equity indexes staged a modest rebound on Wednesday, led by German stocks after a strong update from BMW, although worries about Greece capped sentiment.

Greece’s main stock index fell 3 per cent, extending Monday’s losses on uncertainty surrounding a parliamentary vote to elect a new president later this month.

If prime minister Antonis Samaras fails to secure victory for his presidential candidate, snap national elections could be called that the leftist Syriza party - a fierce opponent of Greece's bailout deal with the European Union and IMF - would likely win.

A 15 per cent rally in European shares since mid-October, fuelled by expectations that the European Central Bank would start buying sovereign bonds next year, ran into the sand this week after the Greek government called the presidential elections late on Monday.

Traders worry uncertainty in Greece could cause the ECB to postpone any decision on bond purchases, known in the market as quantitative easing, or QE.

“If there’s complete indecision in Greece, the ECB is unlikely to do something in January, which would take that (support) away from the market,” Mike Reuter, a broker at Tradition, said.

“I’m bearish overall but the QE pushes the market higher so nothing get in its way, I’ll have to be bullish in the year-end.”

Elsewhere, BMW Group rose 1.1 per cent after saying deliveries of BMW, Mini and Rolls-Royce cars rose 7.6 per cent in November to 188,342 thanks to a continued strong demand in China and a 20 per cent rise of its BMW and Mini sales in the UK.

Germany’s Dax index was up 0.7 per cent, outperforming all major European indexes and the FTSEurofirst 300 index of top regional shares, which was up 0.3 per cent at 1,367.28 points. It had fallen 2.3 per cent on the previous day.

Among smaller stocks, Britain’s Ashtead rallied 6.7 per cent after raising its full-year earnings guidance and posting a 33 per cent rise in first-half profit.

Reuters