Europe: Stocks rebound after ECB calls emergency meet

EUROPE stocks rebounded at the open on Wednesday (Jun 15) after the European Central Bank (ECB) called an emergency meet to address volatile markets, while investors also brace for a major US rate hike.

London's FTSE 100 index rose 0.7 per cent to 7,237.47 points, Frankfurt's DAX rallied 1.0 per cent to 13,441.73 points and the Paris CAC 40 won 1.3 per cent to 6,027.21, before paring gains.

All 3 main markets had slid Tuesday as investors fretted over the possibility that the Federal Reserve will move aggressively to combat inflation.

Traders' screens were awash with red at the start of the week after data showed late last week that US consumer prices soared at their fastest pace in 4 decades.

The ECB's governing council will hold an "ad-hoc meeting" later on Wednesday to "discuss current market conditions", a bank spokesman said.

The borrowing costs of some eurozone countries have risen faster than those of others as the ECB tightens its monetary policy. The bank has vowed to prevent such "fragmentation".

AvaTrade analyst Naeem Aslam said traders felt major central banks, including the ECB and Fed, had mistakenly described the inflationary spike as "transitory" - and rising borrowing costs will now spark more economic pain.

"There is no shortage of pessimism in the market and traders are on the edge as they know that central banks have made the biggest blunder by calling inflation transitory - and their current policy is going to cause a great deal of pain," Aslam told AFP.

"The ECB's emergency meeting is pretty much to address the soaring inflation concerns."

The ECB last week drew a line under years of ultra-loose monetary policy, bringing an end to its massive bond-buying stimulus programme at the beginning of July.

It also flagged its first interest rate hike in over a decade for the same month, as eurozone inflation rockets. AFP