Europe Stocks Climb to Three-Month High on Stimulus Anticipation

  • Investors expect ECB to extend asset purchases, cut rates
  • European stocks heading for second consecutive monthly gain

The European Stoxx 600 Closes at Three-Month High

European stocks pulled off a second monthly advance on bets the region’s central bank will increase stimulus at this week’s meeting.

The Stoxx Europe 600 Index rallied to a three-month high, taking its November gain to 2.7 percent. Auto-related shares rose the most on Monday as the weakening euro is seen helping exporters. Economists surveyed by Bloomberg unanimously predict the European Central Bank will expand stimulus on Thursday.

“It’s all about assessing your positions ahead of the ECB this week,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “That will give investors some direction going into the new year. While I think Draghi will deliver, the market has already been priced quite aggressively for a deposit-rate cut. We might get a case of people buying the rumor and selling the fact.”

The Stoxx 600 increased 0.5 percent to 385.43 at the close of trading in London, reversing an earlier drop of as much as 0.5 percent. While commodity producers also ended up rallying on Monday, BHP Billiton Ltd. bucked the trend. It extended a seven-year low, after Brazil’s Attorney General said the country will seek as much as 20 billion reais ($5.2 billion) compensation for a dam collapse at an iron-ore venture owned by the company and Vale SA.

The European stock index has rebounded 14 percent since a September low on expectations of further ECB stimulus, coupled with optimism that the global economy is strong enough to withstand higher U.S. interest rates.

Among stocks moving on corporate news on Monday, Deutsche Lufthansa AG added 1.4 percent after the Verdi union confirmed an agreement on pay and retirement with ground crew, technical and cargo workers, even as the carrier continues to negotiate with restive cabin staff. Aryzta AG rallied 5.8 percent after reporting an increase in quarterly sales.

Aberdeen Asset Management Plc fell 4.6 percent after reporting net outflows in the fourth quarter as investors continued to pull money from the firm’s emerging market funds. Delta Lloyd NV tumbled 10 percent after the Dutch insurer announced plans to raise as much as 1 billion euros ($1.06 billion) selling stock in a rights offer to help boost capital.

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