European shares surge ahead of ECB outcome

Upbeat economic outlook from US Fed boosts risk appetite

European stocks jumped on Thursday after upbeat economic outlook from the US Federal Reserve boosted risk appetite, with investors turning to the European Central Bank for its policy update.

The pan-European Stoxx 600 index rose 1.4 per cent by 0813 GMT, eyeing its best day in over a week, with tech and energy sectors leading the gains.

The Fed on Wednesday flagged a long-awaited end to its pandemic-era bond purchases in March and signalled as many as three rate hikes in 2022, but delivered an otherwise upbeat economic outlook.

The ECB and the Bank of England are set to hold policy meetings later in the day. ECB officials are likely to draw down the bank’s Pandemic Emergency Purchase Programme, but investors are waiting to gauge how the six-year-old Asset Purchase Programme may pick up the slack with rate rises still a while away.


Among individual stocks, Swiss pharma company Novartis AG jumped 3.3 per cent after launching a new share buyback of up to $15 billion to be executed by the end of 2023.

Airbus SE rose 3.3 per cent after Australia's Qantas Airways Ltd chose the European planemaker as the preferred supplier to replace its domestic fleet, switching from Boeing.

UK shares rose on Thursday, tracking gains in global markets.

The blue-chip FTSE 100 gained 1.2 per cent as of 0804 GMT, breaking a six-day slump on the Fed’s upbeat tone despite ramping up stimulus removal plans.

Miners led the gains, up 2.0 per cent, lifted by gains in copper prices on the improved risk sentiment.

Caught between a surge in inflation and the fast-spreading Omicron variant, the Bank of England remains in a tough spot as policymakers decide whether they should delay its first interest rate hike since the Covid-19 pandemic again or take action.

Interest rate futures indicated a 66 per cent chance that the BoE will raise rates to 0.25 per cent from 0.1 per cent when it announces its policy decision at 1200 GMT, up from less than 50 per cent before the decade-high inflation numbers for November .

Rate-sensitive banks added 0.9 per cent ahead of the decision.

Fund manager Schroders plc gained 1.5 per cent on news that it is in advanced talks to buy a 75 per cent stake for about £360 million (€423 million) in Greencoat Capital.

Online fashion retailer Boohoo plunged 19 per cent after warning that expectations for its 2021-22 year will be lower than previously guided, blaming higher returns, delivery disruptions and pandemic-related cost inflation. – Reuters