By Sara Sjolin, MarketWatch
LONDON (MarketWatch)--European stock markets staged broad-based
gains on Thursday after European Central Bank President Mario
Draghi said the Governing Council was "comfortable" with easing at
the next policy meeting.
The Stoxx Europe 600 index rallied 1.1% to close at 339.56,
after a volatile trading session.
Helping lift the pan-European benchmark, shares of Barclays PLC
(BCS) gained 7.9% after the U.K. bank presented its strategy
update, including plans to cut 7,000 jobs at its investment bank by
2016. The bank will also create a bad-bank division consisting of
115 billion pounds ($195 billion) of risk-weighted assets.
Shares of Metro AG gained 2.7% after the German retailer backed
its 2014 guidance, even as it reported a widened second-quarter
loss due to a strong euro and the timing of Easter.
Shares of BT Group PLC (BT) picked up 2.9% after the telecom
company posted a rise in fourth-quarter profit despite lower
revenue, as its sports TV channels boosted business.
For the broader markets, the main indexes were sent on a
roller-coaster ride in the afternoon, when ECB chief Mario Draghi
held his monthly news conference. Draghi said the central bank is
"comfortable with acting" at the June meeting, with the caveat that
policy makers want to see the June update of staff economic
forecasts.
Stock markets spiked on the comments and the euro (EURUSD)
instantly started to move lower, trading around $1.3865 at the time
of the European close, down from $1.3910 late Wednesday.
"This means that June's announcement will not be a run-of-the
mill affair--it increasingly looks as if the central bank will act
either to cut rates or buy assets," said Alex Edwards, head of
corporate desk at UKForex, said in a note. "That $1.40 level now
looks much further away."
The easing hint helped send European banks higher. Shares of
Banco Popolare dell'Emilia Romagna Scarl rallied 6.5%, Intesa
Sanpaolo SpA climbed 4.6%, Banco Santander SA (SAN) rose 2.4% and
Deutsche Bank AG picked up 1.8%.
No change this time
Earlier in the day, the ECB kept its main refinancing rate at a
record low of 0.25%. The decision was widely expected, even after
the Organization for Economic Cooperation and Development earlier
in the week called on the central bank to lower rates immediately
to fight off low inflation. Several eurozone politicians have also
urged the ECB to stimulate the economy further to take the heat out
of the strong euro that could hamper the economic recovery.
At Thursday's meeting, Draghi sarcastically thanked politicians
and organizations for the "advice" on the issues, noting that the
ECB is an independent institution.
Earlier on Thursday, the Bank of England also kept policy on
hold, leaving the key lending rate at a record low 0.5% and making
no changes to its 375 billion pound ($635.8 billion) asset-purchase
program.
The U.K.'s FTSE 100 index gained 0.6% to 6,839.25, while
Germany's DAX 30 index climbed 0.9% to 9,607.40. France's CAC 40
index rose 1.4% to 4,507.24.
China data
In the early morning, investors in Europe found comfort in
Chinese trade data that unexpectedly showed both imports and
exports improved in April. Exports rose 0.9% last month from a year
earlier, swinging back from a 6.6% fall in March and an 18.1%
plunge in February, according to China's customs statistics.
Meanwhile, imports in April rose 0.8% after a 11.3% decline in
March.
The surprising turnaround in the April statistics suggests that
China's export growth is gaining momentum, indicating a pickup in
global demand.
Russian stocks underperformed most of Europe, however, as a main
pro-Russian separatist group in eastern Ukraine said it would go
ahead with a secession referendum set for Sunday, according to
Interfax. Additionally, the Russian defense ministry said about
15,000 Ukrainian troops have assembled near the border with
Russia.
The MICEX index rose 0.6% at 1,371.42, but were earlier in the
day mired in red. The ruble (USDRUB) declined against the dollar,
with the greenback buying 34.9985, up 0.2% from Wednesday,
according to FactSet.
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