Europe close: Stocks finish higher on ECB asset purchases, China interest-rate cut
The European Central Bank (ECB) provided a boost to markets on Friday after saying it would boost asset purchases if inflation remained low for too long.
Speaking in Frankfurt, ECB President Mario Draghi said the central bank would “do what we must” to help address dangerously low inflation and a stagnant economy. The ECB on Friday started buying asset-backed securities in an attempt to encourage banks to lend.
"Altogether, this implies that we are getting closer to the point at which the ECB may decide that one of the contingencies for further substantial action has been triggered,” Barclays said of Draghi’s remarks.
“This could as early as December if the November [inflation] estimate (to be released next week) surprises to the downside (consensus forecast 0.3% year-on-year after 0.4% year-on-year in October). However, we consider it somewhat more likely that the announcement to also purchase government bonds will come in the first quarter next year (our baseline)."
The euro fell 1.16% to $1.2394 at close of trading.
China cuts interest rates
China slashed its cost of borrowing for the first time in two years in a bid to kick-start its flagging economy. The country's central bank reduced one-year benchmark lending rates by 40 basis points to 5.6% to lift an economy on course for its slowest annual growth in more than two decades.
The People's Bank of China added that one-year benchmark deposit rates would be lowered by 25 basis points and the reductions would take effect on 22 November.
Oil stocks gain as crude increases
Oil and gas companies rallied, including Tullow Oil and Total, after crude headed for its first weekly increase since September. Brent crude futures advanced 1.6% to $80.62 per barrel, according to the ICE.
Bouygues SA was a high riser after Altice SA’s chief executive officer said it would be open to discussing a deal to buy all of Bouygues Telecom.
BW Offshore advanced after reporting third-quarter revenue that beat analysts’ estimates.
Ophir Energy slumped after an oil explorer active in Africa agreed to buy London-based producer Salamander Energy in an all-stock offer.
Orange SA jumped after chief executive Stephane Richard said it will consider a strategic alliance with a landline or cable provider.
STMicroelectronics dropped on news it may not reach its goal of a 10% operating margin by the middle of 2015.