Europe Stocks Higher; Russia Shares Fall 2%

European stocks held gains on Thursday, as ECB President Mario Draghi spoke at the bank’s monthly press conference. Both the Bank of England (BoE) and the European Central Bank (ECB) kept interest rates at record lows.









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The Euro Stoxx 600 Index traded around 0.1 percent higher on Thursday afternoon.

Bouygues traded up to 9 percent higher after reports it was bidding to buyVivendi‘s SFR, France’s second-biggest telecom group. Bouygues’ bid will be financed with cash, debt, and shares from the newly combined company and will not require a capital increase, Reuters reported.

Central bank rate decisions

However, the main focus for the session was the rate decisions by the two central banks. As expected, the ECB left its main interest rate and its deposit rate unchanged at 0.25 percent and zero percent, respectively.

Mario Draghi, the president of the ECB, gave a press conference following the decision, stating that the modest recovery in the euro zone was continuing and firmly reiterating forward guidance.

The International Monetary Fund (IMF) has highlighted the risks of low inflation in the zone, and called on the ECB to act. In response, Draghi said that “both upside and downside” risks to inflation are limited, and “broadly balanced over the medium term,” while stressing that “inflation expectations for the euro area over the medium to long term continue to be firmly anchored.”

Meanwhile, the BoE kept its benchmark rate unchanged at a record-low of 0.5 percent. Gilt purchases stayed at £375 billion ($627 billion), as expected. The BoE also announced it would start reinvesting the cashflow from its bond purchases, starting next week.

U.S. stocks started modestly higher on Thursday, as investors monitored economic reports as well as ongoing developments in Ukraine. In the U.S. on Thursday, the government reported jobless claims last week declined by 26,000 to 323,000. Another report had U.S. productivity rising 1.8 percent in the fourth quarter.

Ukraine in focus

Investors are also keeping a close eye on events in Ukraine. EU heads of state met at a summit on Thursday to discuss developments in Ukraine. Tensions between Ukraine and Russia have heightened in recent weeks and on Sunday, Russia carried out a bloodless invasion of the Ukrainian peninsula of Crimea.

Crimea’s parliament voted to join Russia on Thursday, and its Moscow-backed government set in motion a referendum that will be held within 10 days. Russia’sMICEX Index traded lower by just over 2 percent in the afternoon session.

Data watch

Back in Western Europe, an index from Halifax showed U.K. house prices rose 2.4 percent in February. For the year, house prices soared 7.9 percent, more than the 7.2 percent predicted by analysts.

German industrial orders also managed to beat expectations. The reading for January came in at 1.2 percent, against a prediction for an uptick of 0.7 percent.

The Italian and Spanish stock markets outperformed for a second consecutive day, with Italy’s FTSE MIB rising by around 0.6 percent, while Spain’s IBEX rose 1 percent.

Aviva shares climb

In stocks news, infrastructure company Balfour Beattyreported a 78 percent collapse in pre-tax profit in 2013. The stock slipped 7.4 percent after the announcement.

Shares in Schrodersjumped up 4.5 percent after the group announced that profits at both its asset management and wealth management business soared in 2013.

British insurer Aviva unveiled a 6 percent increase in operating profit for 2013; shares rose over 8 percent higher afterwards.

Source: CNBC

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