ROME: European stocks have rebounded sharply, buoyed by a signal of optimism that the ECB will take new stimulus measures soon and bright data on the US economy, analysts say.
London’s benchmark FTSE 100 index rallied 2.34 per cent to end at 6569.96 points, as investors shrugged off news that the Bank of England held British interest rates again at a record-low level of 0.50 per cent.
In Paris the CAC 40 soared 3.59 per cent to close at 4260.19 points, while Frankfurt’s DAX 30 index shot up 3.36 per cent to 9837.61 and Milan’s FTSE Mib jumped 3.69 per cent.
“Shares in Europe have once again rallied strongly as expectations of continued low rates and an improving US economy help underpin risk appetite,” said Jasper Lawler, market analyst at CMC Markets.
However, the euro nosedived under $US1.18 to reach the lowest level in more than nine years, hit by mounting speculation that the European Central Bank could launch quantitative easing to counter deflation.
The European single currency plunged to $US1.1754 — the lowest level since the beginning of December 2005. It later stood at $US1.1810.
“Optimism over more ECB stimulus may have helped equities but the prospect of further central bank easing was detrimental for the euro, which slid to a new nine-year low,” said ETX Capital analyst Daniel Sugarman.
Back in London, Britain’s biggest retailer Tesco topped the risers board as the supermarket chain unveiled a new restructuring aimed at reviving its fortunes.
The group, which did not outline potential job losses, will overhaul central overheads to deliver STG250 million ($A456.33 million) of savings per year.
Tesco shares skyrocketed nearly 15 per cent to close at 209.25 pence, although it also revealed sliding sales in the key Christmas trading period.
On the downside, clothing-to-food retailer Marks and Spencer topped the fallers board, sinking 3.52 per cent to close at 445.90 pence.
M & S sales slid 1.6 per cent in the 13 weeks to December 27, as clothing was hit by unseasonably warm autumn weather in the third quarter.
The Milan market got a boost from bank shares after speculation mounted that a domestic or foreign bank may try to take over troubled Monte dei Paschi bank, possibly by giant Spanish bank Santander, which made a surprise announcement Thursday that it is seeking to raise 7.5 billion euros in fresh funds.
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