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[NEW YORK] US stocks rose modestly and European equities treaded water following strong German economic data and fairly upbeat remarks from Federal Reserve Chair Janet Yellen.
A closely-followed survey showed German businesses rounded off 2016 with a stronger-than-forecast increase in confidence, despite fears for the future over Brexit and the incoming administration of US President-elect Donald Trump.
The Munich-based Ifo Institute's headline business confidence index hit 111.0 points in December, up 0.6 points from November's reading.
"The German economy is in a festive mood," Ifo head Clemens Fuest said, hailing a "strong finish to the year."
In a commencement address, Yellen said the US job market is at its strongest since the start of the financial crisis. The remarks were Ms Yellen's first since the Fed's decision last week to raise interest rates for only the second time a decade.
Analysts said buying enthusiasm was marred by the assassination in Istanbul of Russia's ambassador to Turkey by a Turkish policeman and by the killing of at least nine when a truck ploughed into a busy Christmas market in Berlin.
London closed 0.1 per cent higher and Frankfurt added 0.2 per cent while Paris lost 0.2 per cent.
The S&P 500 in the US rose 0.2 per cent.
Trading volume is expected to taper off as the week moves closer to the Christmas holiday weekend, and the calendar of data releases is quite sparse.
"As we run up to Christmas, with little corporate news, the expectation is that markets will remain relatively quiet," Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor.
The dollar edged higher against the euro again, having soared last week after the Fed raised borrowing costs and forecast three more increases next year, as the economy continues to recovery. The central bank may need to raise more aggressively should Trump honour promises for tax cuts and big infrastructure spending.
Deutsche Bank shares closed 4.7 per cent down following a report the bank could reach a deal this week with the US Department of Justice over a looming multi-billion-dollar fine.
The Reuters news agency quoted a source "with direct knowledge of the matter" as indicating that the bank was "set to pay far less" than the US$14 billion the United States has asked for.
Disney jumped 1.4 per cent following a strong opening weekend performance for the latest release in its Star Wars movie franchise.
Rogue One: A Star Wars Story raked in US$155 million from Friday to Sunday, well above the competing options, and better than some had expected, Exhibitor Relations said.
In Milan, shares in the world's oldest bank, Banca Monte dei Paschi di Siena, were down 10.8 per cent on the first subscription day for a capital increase which the troubled lender hopes will help toward a total five billion euros it needs to raise by the end of the month.
The bank's chairman Alessandro Falciai, said "everything is going according to plan", but analysts said investor interest was cooler than it had hoped.
Michael Hewson, at CMC Markets, said the "continued weakness" of the Italian economy was probably the reason "why so far there has been so little investor interest."