Europe Stocks Erase 2015 Loss on Central-Bank Stimulus OptimismNamitha Jagadeesh and Inyoung Hwang
European stocks climbed the most in three weeks, erasing their losses for 2015, amid optimism monetary policies by central banks will support the economy.
The Stoxx Europe 600 Index rallied 2.8 percent to 342.35 at the close of trading, extending gains as ECB President Mario Draghi said the central bank’s measures may include buying sovereign bonds. A report today showed German factory orders in November fell more than projected, adding to yesterday’s weak inflation data in boosting speculation the ECB will begin quantitative easing at its next meeting on Jan. 22.
“Market participants expect quantitative easing from the ECB,” said Christoph Riniker, head of strategy research at Julius Baer Group Ltd. in Zurich. “After the ECB meeting and Greek elections, there is certainly some uncertainty that will leave the market. QE equals sentiment boost, which equals help for peripherals.”
Portugal’s PSI 20 Index jumped 3 percent, while Italy’s FTSE MIB Index added 3.7 percent and Spain’s IBEX 35 Index rose 2.3 percent. Greece’s ASE Index reversed gains of as much as 2 percent to decline 2.1 percent, its lowest level since November 2012.
The Stoxx 600 climbed the most since Dec. 18, after yesterday rebounding from a three-day drop. It had fallen 5.5 percent from its Dec. 5 high through Jan. 6 as energy shares slumped and concern grew over Greece as Prime Minister Antonis Samaras said this month’s election could lead to its exit from the euro area.
In Madrid, Santander SA rose 3.3 percent before the Spanish market regulator suspended the stock. The nation’s largest lender is raising as much as 7.5 billion euros ($8.83 billion).
Among other stocks moving on corporate news today, Tesco Plc surged 15 percent, the most since at least 1988. Chief Executive Officer Dave Lewis set out a plan for reviving the struggling U.K. grocer that includes closing dozens of stores, halting dividend payments and disposing of assets worth billions of pounds. Pernod Ricard SA added 5.3 percent after Bank of America Corp. recommended buying shares of the world’s second-biggest distiller.
Marks & Spencer Group Plc lost 3.5 percent after saying same-store sales at a division that includes its apparel business dropped 5.8 percent in the third quarter, missing analysts’ estimates.
In the U.S., minutes yesterday from the Fed’s last meeting showed most officials agreed their new policy guidance means they are unlikely to raise interest rates before late April.