Europe: Stock markets inch higher before ECB meeting

[LONDON]Eurozone stock markets edged ahead at the start of trading Thursday, with all eyes on the ECB's first policy meeting of the year.

Frankfurt's DAX 30 index won 0.2 per cent compared with the close on Wednesday to 11,624.11 points and the Paris CAC 40 rose 0.1 per cent to 4,859.76 .

Outside the eurozone, London's benchmark FTSE 100 opened flat at 7,247.39 points.

The European Central Bank will not deviate from its ultra-loose monetary policy at its first 2017 meeting Thursday, analysts predicted, in the face of calls to tighten from critics alarmed by rising inflation.

"Inflation pressures are starting to build especially in Germany, thus explaining the German criticism of the ECB's accommodative stance," noted VTB Capital economist Neil MacKinnon.

Policymakers at the Frankfurt institution chose in December to keep interest rates at historic lows and extend mass bond-buying, albeit slowing the purchases from 80 billion to 60 billion euros (S$121.5 billion to S$91.1 billion) per month from April.

The economic consequences of Brexit and the election of Donald Trump for the 19-nation eurozone are as yet unclear and the ECB is likely to be mindful of a series of elections this year in France, Germany, the Netherlands, and possibly Italy.

"Today, in their first (ECB) meeting of 2017 they are not expected to do anything further with the most recent minutes highlighting sharp divisions between various policymakers about extensions and monthly amounts," said Michael Hewson, chief market analyst at CMC Markets UK.

"It is already thought unlikely that ECB President Mario Draghi would be able to carry the council to add additional stimulus this year in any case, particularly with a German election coming up in September," he added in a client note.

AFP