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Europe: Stocks hit new records as ECB stimulus looms
[LONDON] The British and German stock markets hit record peaks on Monday on hopes that eurozone quantitative easing stimulus, due to be outlined later this week, will bolster economic growth.
Investor sentiment was also given a shot in the arm after China cut interest rates over the weekend for the second time since November, but the rally quickly ran out of steam as oil prices dropped.
London's benchmark FTSE 100 index slid 0.09 per cent to close at 6,940.64 points, having reached 6,974.26 points in morning trade, its highest intra-day level on record.
Frankfurt's DAX 30 index rose 0.08 per cent to 11,410.36 points, having rallied during the session to an all-time peak at 11,455.08 points.
In Paris the CAC 40 fell 0.69 per cent to 4,917.32 points. Madrid was flat and Milan shed 0.18 per cent.
This Thursday, the European Central Bank (ECB) will unveil the details of the bond purchase programme it is kicking off this month.
Greece is also likely to be at the top of the agenda, following the recent eurozone deal to extend aid to the debt-wracked country.
Ahead of the meeting, official data showed Monday that the eurozone remained mired in deflation territory in February for the third month in a row, although the figure was an improvement.
Consumer prices in the 19-nation eurozone were down 0.3 per cent in February, easing from a 0.6 per cent drop in January.
Unemployment dipped to 11.2 per cent to hit its lowest level since April 2012.
OIL PRICES CAP RALLY
"Today's economic data was good in many respects but many of those positives seemed to have a slightly negative undertone which prevented anyone getting too carried away," said analyst Craig Erlam at online forex broker Oanda.
However Michael Hewson at CMC Markets said "it was a sharp decline in Brent oil prices that served to cap the upside in European equity markets, dragging most of Europe's benchmark indices into negative territory, as the day progressed."
European benchmark Brent North Sea crude for April delivery dropped US$2.09 toUS $60.49 in late trading, as many traders took profits after bumper gains before the weekend and eyed plentiful world crude supplies.
Oil prices, which have fallen by around half since last June, have been a major driver behind slowing inflation and the threat of a deflationary spiral.
At its first meeting of the year in January, ECB chief Mario Draghi announced a programme to buy 60 billion euros (US$67 billion) of private and public bonds each month starting in March 2015 until at least September 2016 in a bid to ward off deflation.
In a deflationary spiral, businesses and households delay purchases, throttling demand, triggering recession and causing companies to lay off workers.
The Frankfurt-based ECB's decision-making governing council will hold its meeting on Thursday in Nicosia, Cyprus.
Meanwhile in foreign exchange activity on Monday, the euro dipped to US$1.1190 from $1.1195 late in New York on Friday.
NASDAQ BREAKS 5,000
Across in Asia, markets rose Monday after the People's Bank of China on Saturday cut interest rates by 25 basis points, citing "historically low inflation" among the factors behind its decision.
The move is the latest aimed at helping the economy regain its lustre after it grew in 2014 at the slowest pace since 1990. Last month the central bank cut the percentage of funds that banks must hold in reserve to try to boost lending.
Shanghai added 0.79 per cent and Hong Kong advanced 0.26 per cent.
Tokyo climbed 0.15 per cent, Seoul gained 0.55 per cent and Sydney rose 0.51 per cent.
Wall Street stocks pushed higher Monday following merger announcements, with the Nasdaq Composite Index climbing above 5,000 for the first time in 15 years, recovering nearly all the ground since the massive dot-com crash of 2000.
In midday trade the Dow Jones Industrial Average was up 0.61 per cent to 18,242.84 points and the broad-based S&P 500 added 0.42 per cent to 2,113.39.
The tech-rich Nasdaq Composite Index pulled back somewhat, showing a 0.73 per cent gain to 4,999.57 points.
The biggest deal was NXP Semiconductor's US$16.7 billion purchase of Freescale Semiconductor, linking two big manufacturers of chips used in cars. NXP jumped 14.4 per cent, while Freescale gained 9.4 per cent.