STOCKS rose the most in a week yesterday, reversing earlier losses, after Mario Draghi said the European Central Bank’s (ECB) expanded purchase programme could include government bonds.
The Stoxx Europe 600 index added 0.5 percent to 337.25 at the close of trading in London, after earlier falling as much as 0.8 percent as Japan unexpectedly slipped into a recession. The Stoxx 600 has rebounded 8.8 percent from this year’s low on October 16 as the Bank of Japan unexpectedly boosted its stimulus and most lenders in Europe passed capital strength tests.
“It’s a further step towards full-scale QE [quantitative easing],” Alessandro Bee, a strategist at Bank J Safra Sarasin, said. “Markets want this kind of stimulus and hearing Draghi mention the possibility of buying government bonds reduces uncertainty. The question is when will it come through? We think the ECB will start doing this in the first quarter of 2015. Central banks are clearly still the major support for European markets.” – Bloomberg