Frankfurt stock market
European markets gained despite a sharp decline in oil pricesReuters

UK and European stocks gained ground today (18 January 2016) as they shrugged off another disappointing Asia session, where a number of markets hit multi-year lows, and a fresh decline in oil prices. Midway through the morning session, London's FTSE 100 and Germany's Dax were both up by 0.46%, while France's CAC 40 and the Pan European Stoxx 600 index were 0.39% and 0.36% higher respectively.

"We have seen a positive open in Europe, though that looks likely to be put to the test if Asia's market performance is any guide," said Michael Hewson, chief market analyst at CMC Markets. "It's encouraging that, so far at least, European markets are shrugging off Asia's losses."

Stock markets across Asia ended firmly in the red after falling to their lowest levels since late 2011. Japan's Nikkei 225 closed at a decline of 1.12% and has fallen by 20% since its June 2015 high, while Hong Kong's Hang Seng fell by 1.45%.

There was marginally better news from mainland China, however, where the Shanghai Composite Index reversed earlier losses to close with an increase of 0.44%, although the index has fallen by 17% since the start of the year.

The renewed decline in Asia came on the back of a disappointing session of Wall Street on 15 January, which saw US stocks fall below their August lows after official data showed industrial output slowed for the third consecutive month in December 2015, while retail sales fell unexpectedly in the final month of last year.

"It's debatable how much further US markets can or will fall, with one set of analysts arguing that the US is continuing to grow slowly but surely while more bearish commentators don't think there's been enough downside just yet, with more high volatility – if not all-out declines – likely," said Michael Van Dulken, head of research at Accendo Markets.

Oil prices extended losses and plunged below the $29 (£20.3, €26.6) a barrel threshold earlier in the day after international sanctions against Iran were lifted over the weekend, meaning Tehran is now free to re-enter what is an already over-supplied oil market.

"With oil at these levels the producing nations continue to sell other assets to balance the books adding more pressure to the global scene," said Mic Mills, head of client services at Capital Index.

Shortly before midday in London, Brent crude – which had touched its lowest level since 2003 ($27.67) earlier in the session – was up by 0.03% and trading at $28.95 a barrel, while West Texas Intermediate gained 0.10% to $29.45 a barrel.