Forexpros – European stock markets turned higher on Thursday, amid speculation the European Central Bank may implement fresh liquidity measures, while concerns over the handling of the euro zone’s debt crisis persisted after Wednesday’s summit in Brussels.
During European afternoon trade, the EURO STOXX 50 jumped 1.19%, France’s CAC 40 climbed 1.32%, while Germany’s DAX 30 advanced 0.73%.
European stocks erased earlier losses following reports the ECB could launch further liquidity operations, after policymaker Ewald Nowotny said the bank has not yet used its full arsenal. Nowotny also added that Greece will have to implement austerity measures in order to receive further support.
Sentiment was hit earlier after data showed that manufacturing activity in the euro area contracted at the fastest pace since June 2009 in May, while service sector activity shrank at the steepest pace in seven months.
Investors were also cautious after Wednesday’s summit of European Union leaders shed no new light on how the euro zone nations intend to tackle their debt crisis, including the threat of Greece’s possible exit from the monetary union.
Financial stocks turned broadly higher, led by Spain’s BBVA, up 2.75%, and closely followed by Dutch lender ING Group, with shares surging 2.55%.
France’s BNP Paribas and Societe Generale also jumped 2.29% and 2.39%, while Germany’s two biggest lenders, Deutsche Bank and Commerzbank, climbed 1.21% and 1.14% respectively.
Meanwhile, German utilities companies E.ON and RWE AG added to gains, surging 2.40% and 1.98%. Earlier in the day, Commerzbank raised its recommendation on E.ON to buy from hold and on RWE to hold from sell.
On the downside, pharmaceutical giant Bayer declined 0.57%, after an advisory panel to the U.S. Food and Drug Administration voted 6- 4 against broader use of the Xarelto blood-thinner to prevent heart attacks and strokes in patients with a common heart ailment.
In London, FTSE 100 jumped 1.56%, as U.K. lenders tracked their European counterparts sharply higher, while data showed the U.K. economy shrank more than initially estimated in the first quarter.
Shares in the Royal Bank of Scotland soared 2.47% and Barclays advanced 2.34%, while HSBC Holdings and Lloyds Banking climbed 1.72% and 1.53% respectively.
Mining giants Bhp Billiton and Rio Tinto extended earlier gains, rising 1.92% and 1.68%, while Anglo American added 0.65%.
Elsewhere, shares in Cable & Wireless skyrocketed 19.58% after the U.K. based mobile-phone network operator, reported earnings before interest, taxes, depreciation and amortization of USD901 million, above analysts’ estimates, and said it expects similar levels through 2012 and 2013.
In the U.S., equity markets pointed to a higher open. The Dow Jones Industrial Average futures pointed to rise of 0.26%, S&P 500 futures signaled a 0.30% gain, while the Nasdaq 100 futures indicated a 0.34% increase.
Also Thursday, the preliminary German manufacturing purchasing managers’ index declined to 45.0 in May from a final reading of 46.2 the previous month, as export orders fell sharply. Analysts had expected the index to rise to 47.0 in May.
Later in the day European Central Bank President Mario Draghi was to speak.
In addition, the U.S. was to release official data on core durable goods orders and initial jobless claims.
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