European credit spreads tightened sharply on Wednesday as US data continued to show less steep declines than expected, which also boosted stock markets. By 1601 GMT, the Markit iTraxx Crossover index, made up of 50 mostly "junk"-rated credits, was at 1,034.5 basis points, according to data from Markit, 30.5 basis points tighter versus late on Tuesday.
The investment-grade Markit iTraxx Europe index was at 155 basis points, 6 basis points tighter. Data from the Institute for Supply Management showed the vast service sector shrank again in January but by less than expected, boosting hopes about business and consumer spending.