European stocks at highest level since 2008

European stocks advanced for a fourth day, extending their highest level in seven years, amid speculation that the European Central Bank will announce a plan for quantitative easing this week.

The Stoxx Europe 600 Index rose 0.5 per cent to 355.03 at 10:04 a.m. in London, with banks and miners leading gains among the 19 industry groups. The equity benchmark has rallied 4.5 per cent in the four days since the Swiss central bank unexpectedly abandoned its currency peg against the euro, a move that increased speculation of a government-bond buying program from the ECB.

"The market is very clearly expecting a significant move from the ECB," said Alex Scott, deputy chief investment officer at Seven Investment Management Ltd. in London. "As optimism builds about that stimulus package this week, it's critical for the ECB to signal that QE will continue until Europe's growth problems are solved. Monetary policy needs to do the heavy lifting at the moment to create an environment in which confidence can continue to recover."

ECB President Mario Draghi will make his biggest push yet to steer the euro area away from deflation by introducing quantitative easing at the Jan. 22 meeting, according to 93 per cent of respondents in a Bloomberg News survey. The ECB president will probably announce a €550 billion bond purchase program, economists say.

German confidence

In Germany, a report from the ZEW Center for European Economic Research showed investor confidence jumped to the highest level in 11 months in January, beating forecasts. Standard and Poor's 500 Index futures added 0.2 per cent before US markets open from a three-day weekend. The MSCI Asia Pacific Index advanced 0.7 per cent as data showed Chinese gross domestic product expanded 7.3 percent in the three months through December from a year earlier, compared with the median estimate of 7.2 per cent. Industrial output and retail sales for December also beat forecasts. Among stocks moving on corporate news, Royal Philips NV gained 3.8 per cent as Financieele Dagblad reported that private equity firms KKR and Co. and CVC Capital Partners Ltd. have a joint interest in the company's lighting unit. Novozymes A/S climbed 4.9 per cent after fourth-quarter profit exceeded estimates. Deutsche Lufthansa AG gained 3.9 per cent as Barclays Plc recommended buying the shares. SAP SE dropped 4.3 per cent after the largest maker of business-management software cut its 2017 profit target.

Bloomberg