WASHINGTON: European stocks ended a volatile trading session mostly higher, with the Stoxx Europe 600 index logging a third quarter of gains. After a late session push, the pan-European index SXXP, +0.18% closed 0.2% higher at 381.14, extending its weekly gain to 1.2%. For the quarter, which came to an end on Friday, the index scored a 5.5% gain, its biggest quarterly advance since March 2015. Friday’s choppy session came after the closely watched flash estimate for March inflation showed consumer prices grew 1.5% in the eurozone, down from 2% in February. Analysts had expected a reading of 1.8%. Part of the inflation drop was due to the Easter effect, as the holiday occurred in March last year, compared with mid-April this year. The Easter holiday tends to push up prices on airfares and hotels, giving a lift to the inflation measure for that month. However, the decline in March was also because of a slower rise in energy and food prices.
“The marked retreat in eurozone consumer price inflation in March facilitates the ECB sticking to its current monetary policy path. It supports the view that a sustainable firming in underlying eurozone inflation pressures has yet to be established,” said Howard Archer, chief U.K. & European economist at IHS Markit, in a note. “We suspect the ECB will end up extending its monthly asset purchases into 2018, but at a slowing rate rather than suddenly stopping it,” he added. After a surprisingly hawkish tone at the ECB’s March 9 meeting, markets started to price in a rate hike as early as December this year. However, according to a Reuters report out earlier this week, some of the central bank’s policy makers felt markets had misinterpreted the message at that meeting and wanted to reassure investors the ECB’s loose monetary policy is nowhere near the end.
