Europe Higher for Second Day on Stimulus Hopes; DAX up 1.1%

European stocks were higher on Wednesday amid hopes the European Central Bank (ECB) and the People’s Bank of China (PBoC) could provide monetary stimulus to boost economic growth.

Meanwhile, Lloyds Bank shares fell after the U.K. government said it would sell more of its stake in the bailed-out lender.







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Stimulus coming?

The pan-European FTSEurofirst 300 Index pushed higher — having hit its highest level since March 12 — in a broad-based rally with all major European bourses and most sectors posting strong gains. This came after a strong finish for stocks on Tuesday, with stimulus hopes helping to boost the “risk-on” sentiment.

Bundesbank President Jens Weidmann — who is also a member of the ECB Governing Council — said on Tuesday that it was not “out of the question” for the central bank to buy bank assets to fight deflation, Reuters reported.

Meanwhile, the prospect of a reserve requirement ratio cut by the Chinese central bank remained in focus, following a disappointing reading of March factory activity.

“The bets are growing that further stimulus measures across Europe and China will be introduced over the coming months, as both the ECB and the PBoC look to give confidence and economic growth a further nudge,” Evan Lucas, a market strategist at spread better IG markets, said in a research note.

Ukraine concerns ease

U.S. stocks continued to snap a two-day losing streak with shares rising on Wednesday. Benchmark indexes extending gains into a second day, after data showed orders for longer-lasting products gained more than expected even as corporate spending on equipment declined.

“The headline-beating 2.2% jump in orders for new durable goods in February was driven by a rebound in the transport sector. Stripping out that volatile component saw orders rise by a more humble 0.2 percent,” noted Andrew Wilkinson, chief market analyst at Interactive Brokers.

“Relative to expectations the report showed pockets of strength, but failed overall to signal the final passage of a cruel winter,” he added.

Financial-data firm Markit reported its Purchasing Managers Index hit 55.8 in March, up from 54.1 a month earlier.

Meanwhile, investor concerns over tensions in Ukraine — which caused stocks to fall on Monday — seem to have eased for the time being. This came as the West looked ready to hold off on further sanctions unless President Vladimir Putin goes beyond the seizure of the Crimean Peninsula.

U.S. President Barack Obama, is due to meet with NATO officials and his European allies in Brussels on Wednesday.

On the data front, German consumer morale looks to be holding steady, according to an April GfK consumer climate survey on Wednesday. The figure for the month ahead was 8.5 which was flat from March and met expectations.

Lloyds shares drop

Shares of Lloyds Banking Group fell 5 percent on Wednesday after the U.K. government said that it would sell a further 7.5 percent stake in the bank, worth about 4.2 billion pounds ($6.9 billion).

Standard Life shares climbed around 5.3 percent after the British insurer announced the acquisition of Ignis Asset Management for $643.71 million.

Shares of Mediaset rose 1.9 percent after reporting a return to profit on Tuesday evening, thanks to cost cutting and lower impairments.

Source: CNBC