European stocks rise as ECB keeps up monetary support programme

European stock markets rose Thursday, lifted by the European Central Bank’s decision to stick with its monetary support programme and re-examine it in December in case more measures were needed.

The pan-European FTSEurofirst 300 index hit session highs for the day and was up by 1.2 percent going into the close of trading, while the euro zone’s blue-chip Euro STOXX 50 index climbed 1.7 percent.

The ECB kept interest rates unchanged at a record low. It also left the key parameters of its quantitative easing (QE) scheme unchanged but said it would re-examine its policy at its meeting in December.

Although some rate setters, such as Bank of Spain Governor Luis Maria Linde, have argued the ECB should tweak the asset purchases now, most believe quantitative easing needs to be given more time to work as its positive effects are just starting to pass through.

The ECB’s plans have also pushed down returns on bonds and cash, driving investors over to the better returns available from shares, with Draghi adding that the ECB had discussed a possible deposit rate cut.

“Draghi’s comments mean continuous support for equities from the ECB,” said Hampstead Capital hedge fund manager Lex Van Dam.

Denmark’s Novozymes, the world’s largest industrial enzymes maker, was among the best performing stocks in Europe.

Its shares surged 9 percent as investors expressed relief that the company’s results had managed to meet market forecasts, with the stock having slumped in August after it reported disappointing second quarter results.

French spirits group Pernod Ricard also rose 4.6 percent after quarterly sales rose more than expected, as a strong U.S. performance offset sluggish China sales.

Publicis slumped 10 percent, however, after the world’s third-biggest advertising agency cut its annual organic growth target to 1 percent from 2.5 as quarterly sales slowed.

Source: Reuters