European stocks continue global rally ahead of ECB decision; more stimulus eyed

Stock markets in Europe were higher during Thursday’s morning trade as investors awaited an announcement from Italian President Mario Draghi of the ECB (European Central Bank) on further monetary stimulus.

The pan-European Euro Stoxx 600 index was up by 0.26 percent with most sectors trading in the black. Basic resources were the best performing sector in early morning trade, climbing more than 0.8 percent. Higher metal prices on Thursday morning helped the mining stocks alongside positive trade data from China overnight.

Investors were firmly focused on the rate decision by the ECB on Thursday. Traders’ expectations point to an extension of the ECB’s quantitative easing program by another six months but along with some signals that this monetary policy would not last forever.

“Our economists expect the ECB to announce a 6 month extension of the current 80 billion euro QE program from March 2017 to September 2017. They also expect this to be complemented by a move to improve the supply of eligible bonds, for example, the removal or softening of the yield floor,” Jim Reid and Craig Nicol, two analysts at Deutsche Bank, said in a morning note on Thursday.

The ECB will present its latest rate decision at 12.45 p.m. London time.

Italy asks for more time on BMPS

Meanwhile, the Italian authorities have requested more time from the ECB to fix the capital issues of its third largest lender – Banca Monte Dei Paschi di Siena, according to the Financial Times. The bank outlined in a letter to the ECB that the current political instability has made it very difficult to proceed with the recapitalization process, according to the report. Its shares were up by 2.2 percent in early morning trade.

Russia said that a consortium of Glencore and Qatar’s sovereign wealth fund acquired a 19.5 percent stake in its top state-controlled oil company, Rosneft, in a deal worth $11.3 billion.

However, stocks in the oil and gas sector fell more than 0.4 percent. Investors have doubts over whether non-OPEC and OPEC members will reach a final output cap deal at a meeting over the weekend.

Shares of Sports Direct were down by 4.8 percent on Thursday after the company reported disappointing results for the first half of 2016.

Source: CNBC