European markets on Monday clung to the expectation of further stimulus from the European Central Bank, with the yield on Spanish government debt sinking to a record low in quiet holiday-time trading.

The yield on the country's 10-year bonds dropped 0.03 percentage point to 1.68%. Yields fall when prices rise; for these bonds, yields stood at over 4% in January. Greek government bond yields fell back 0.07 percentage points to 8.36%--a level last seen on Dec. 5. The Stoxx Europe 600 index rose 0.77% to 342.9 as stock markets across Western Europe registered modest gains.

Last week, ECB executive board member Benoît Coeuré boosted hopes of a government bond-buying program when he told The Wall Street Journal that it is "not that much of a question on whether we should do something, but more a discussion on the best way to do it." Pimco, a bond manager that handles $1.9 trillion of assets, predicted in its December outlook published last week that the ECB will announce a bond buying program of EUR500 billion ($613 billion) to EUR1 trillion centered on government bonds at either its January or March 2015 meeting.

Also Monday, Brent crude oil prices rose by 3.8% in a pickup that follows a decline of over 40% this year. Saudi Arabia said Sunday that the Organization of the Petroleum Exporting Countries is unlikely to reduce output, but added that it predicts a rebound next year.

Currency markets were largely sleepy, but the U.S. dollar rose to 119.84 against the Japanese yen from 119.50, while the euro was up slightly at 1.2260 against the buck.

The ruble continued to recover a torrid week that saw the currency plummet to 80 against the dollar despite the Central Bank of Russia raising interest rates by 6.5 percentage points to 17%. On Monday the ruble strengthened by 4% against the U.S. dollar to 57.

The Nigerian naira also recovered slightly to 184.45 against the dollar from 186.80 at the open. The oil price slump has hit Nigeria hard, with the country relying on oil for around 80% of government revenue, according to the International Monetary Fund.

Last week, the Nigerian central bank banned dealers from depositing currency-trading funds overnight in an effort to stem the slide in the naira.

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