European stocks higher ahead of ECB rate decision

European stocks traded higher Thursday morning, after soft economic data bolstered expectations of a rate cut from the European Central Bank (ECB).

The pan-European Stoxx 600 went up around 0.4 percent during early morning deals, with most sectors and major bourses in positive territory.

Market focus is largely attuned to global central banks, amid speculation outgoing ECB President Mario Draghi could pre-empt a move by the U.S. Federal Reserve and push for lower borrowing costs.

The ECB is scheduled to announce its latest interest rate decision at 12:45 p.m. London time, with Draghi’s press conference set to follow at around 1:30 p.m.

Some market participants expect policymakers at the central bank to cut rates by 0.1 percent on Thursday, while traditional ECB watchers tend to believe it is more likely the bank will promise to ease monetary policy over the coming months instead.

A flurry of purchasing manager index (PMI) readings in the U.S. and Europe came in weaker-than-anticipated on Wednesday, fueling hopes the ECB and Federal Reserve would ease monetary policy settings soon.

“The risk of something big happening today is still under-priced,” Frederik Ducrozet, strategist at Pictet Wealth Management, said via Twitter on Thursday.

Ducrozet said the chances of a rate cut had increased “substantially” after a series of weaker-than expected economic data. However, the “bigger question” would concern Draghi’s comments on quantitative easing, he added.

The euro hovered close to two-year lows during early morning deals, trading down 0.1 percent at $1.1132.

Source: CNBC