European stocks rose, posting the biggest six-day gain since December 2011, as ECB President Mario Draghi announced a plan to buy government bonds.
The Stoxx Europe 600 Index climbed 1.7 percent to 364.05 at the close of trading, the highest level since December 2007. The gauge extended gains after Draghi’s announcement and later briefly erased them. The European Central Bank in March will start an asset-purchase plan including private and public securities worth around 1.1 trillion euros ($1.3 trillion).
“People were hoping for more and they got more,” said Stephen Macklow-Smith, head of European equity strategy at JPMorgan Asset Management in London. “This will push investors into higher-yielding assets. Draghi was careful not to exclude the option of extending the program if inflation remains below target. We should have more faith in the euro zone recovery.”
The Stoxx 600 has climbed 7.2 percent since Jan. 14 amid speculation the ECB will expand stimulus measures. The central bank on Wednesday was said to consider asset purchases of 50 billion euros a month from March through the end of 2016. The Swiss National Bank’s unexpected move to abandon its currency peg against the euro last week strengthened the case for the ECB to start QE.
The ECB said it will purchase 60 billion euros a month of assets until September 2016 and reduced the cost of its long-term loans to banks. The central bank earlier kept its interest rates at record lows.
In the U.S., three rounds of Federal Reserve stimulus helped the Standard & Poor’s 500 Index more than triple, from March 2009 to a record on Dec. 29. The central bank ended its quantitative easing program three months ago.
National benchmark equity indexes of Italy and Portugal climbed the most among 18 western-European markets, up more than 2 percent. The yield on Spanish 10-year bonds fell to a record, with the IBEX 35 Index gaining 1.7 percent.
A gauge of bank stocks in Europe rallied for a sixth day, its longest streak in more than a year, amid speculation that the ECB’s measures will boost the euro-area economy and increase lending. Mining and auto stocks also gained, up more than 2.8 percent.
Logitech International SA rallied 7.4 percent after the maker of computer mice raised its 2015 profit forecast and reported third-quarter sales that beat estimates. Royal Mail Plc advanced 3.6 percent after saying its U.K. parcel division handled more packages in December than the previous year.
CRH Plc climbed 2 percent after people familiar with the matter said the Irish building-materials company is the leading bidder for the assets that cement makers Holcim Ltd. and Lafarge SA need to sell ahead of their planned merger.