Europe close: Upbeat remarks on Eurozone economy and Chinese stimulus lift stocks
Further stimulus measures in China and upbeat remarks from European Central Bank President Mario Draghi lifted stocks in the euro-area.
The People´s Bank of China lowered the reserve requirement ratio (RRR) by 100 basis points to 18.5%, effective from 20 April. The cut was bigger than expected by analysts and was the largest decrease since late 2008.
"The markets were buoyed [...] by the news that China’s central bank has taken fresh, if tentative, steps in combatting the economic slowdown," said Spreadex analyst Connor Campbell.
Mining stocks, including BHP Billiton and Rio Tinto, gained following the report as industrial metals rose.
Meanwhile, Draghi said the monetary authority was confident that the Eurozone growth will accelerate.
Writing in the bank’s 2014 annual report, Draghi said the common currency bloc would overcome last year’s struggle, adding he also expected inflation to return to its medium-term target "without undue delay".
Echoing his remarks, Standard & Poor’s said it expects the Eurozone to “grow faster” along with the US and Japan, despite the slowdown in China.
“The European Central Bank's quantitative easing programme is a significant policy shift that should help underpin a surprisingly robust cyclical upswing,” S&P said in a report.
Fears over a Greek debt default continued as International Monetary Fund (IMF) chief Poul Thomsen said talks have gathered momentum but still have a long way to go.
Greece is negotiating with the IMF and the EU on a package of economic reforms in order to unlock a further €7.2bn bailout tranche.
“The unlikelihood of a deal being struck between Greece and its creditors has sent short-term Greek bond yields to new record highs again on Monday,” said Jasper Lawler, market analyst at CMC Markets.
“For now Greece’s troubles are contained within Greek markets but once the positive sentiment from Chinese stimulus has worn off, other European markets may follow suit closer to the Eurogroup meeting on Friday.”
The euro fell 0.43% to $1.0739 at the close.
In commodities, Brent crude rose 0.016% to $63.46 per barrel at 11:58 BST while West Texas Intermediate grew 1.2% to $56.42, ICE data revealed.
Companies
Fresenius Medical Care AG gained after a report said it’s discussing a purchase of Israel’s Nephromor.
Telenet Group Holding jumped after agreeing to buy Royal KPN NV’s Belgian mobile-phone business Base for €1.33bn. KPN gained.
Petrofac slumped after saying it expects a further loss on its Shetland gas project this year, due to delays and higher costs.
Tesco dropped after the Financial Times reported the grocer may post an annual loss of as much as £5bn on Wednesday.