European equities inched higher on Thursday, recovering after the previous session's declines, with BP a strong gainer after winning a reprieve over Gulf spill payouts. BP rose 1.3% to 438 pence, one of the top individual points contributors to the FTEurofirst 300, after the energy company won a legal reprieve in a case related to settlements over the 2010 Gulf of Mexico oil spill. "(Today's news) could help in terms of releasing pressure on the stock ... It could easily have another 10 to 20 pence upside from here," BTIG strategist Nick Xanders said.
The FTSEurofirst 300 was up 0.2% at 1,249.55 points by 0729 GMT, having dropped 0.7% on Wednesday. The euro zone's blue-chip Euro STOXX 50 rose 0.1% to 2,921.04 points. But the market could struggle to make much headway given the likely impact of the US government shutdown on talks to raise the country's debt ceiling by mid-October. Analysts say that if this is not done it would push the world's biggest economy into default and hurt the pace of economic recovery. "The US government shutdown is keeping investors from dipping their toes into the markets and buying into recent weakness," Sanlam Securities' head of trading, Mark Ward, said. "Until theUS debt ceiling is raised by Congress, volumes in Europe will continue to be low, with stocks treading water."
Barclays Capital technical analyst Lynnden Branigan concurred, saying that Wednesday's "inside" move - where all of the trading activity was inside the range of the previous day - "speaks of the indecisiveness in the market place". Branigan reckoned the index will remain trapped within the range seeen over the last two weeks - between 2,955 and 2,877 - until later in the month. "I don't think there's the impetus in the market to push it either way."