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Europe: Shares get euro boost after ECB comments


[LONDON] European shares ended on a high Thursday, buoyed by a weaker euro on the back of cautious comments from ECB President Mario Draghi on inflation, while M&A news sparked some sizeable stock moves.

The pan-European Stoxx 600 was up 1.1 per cent at its close, while Euro zone stocks also rose 1.1 per cent.

Though the ECB dropped its pledge to increase its bond buying if needed, comments by President Mario Draghi that policy would remain "reactive" and that measures of underlying inflation were still subdued weighed on the euro, which in turn benefited Europe's exporter stocks.

"Depending on how long the ECB continues to hover around the exit without going through, the euro may have to soften further," Ken Odeluga, market analyst at City Index, said.

"In turn, that could open up further breathing space for European shares." Merger and acquisition news drove big stock moves once again.

Spanish construction firm ACS rose 8.7 per cent after reports it was in talks with Italy's Atlantia to break up Abertis in an effort to avoid a bidding war for the highway concessions company.

Atlantia, which confirmed preliminary talks with ACS over Abertis, gained 5.1 per cent, while Abertis fell 4 per cent.

Shares in Hochtief, which had also bid for Abertis, rose 7.3 per cent.

"It's positive news since instead of a bidding war there will be a division of assets and we'll get a fairer price and maybe better synergies," said Stefano Fabiani, fund manager at Italy's Zenit.

Another Milan-based fund manager said: "It's particularly good news for ACS/Hochtief since the market didn't like their offer because it increased leverage." Earnings took their toll on some stocks.

French supermarket Casino dropped 3.7 per cent after its results disappointed investors. The grocer said profit grew by over 10 per cent in France for the year, against market expectations of 14 per cent.

A Reuters report that is preparing to sell electronics directly into Brazil, a key market for Casino, could also be weighing on the shares, a trader said.

Hugo Boss shares fell nearly 7 per cent after the German fashion house struck a more cautious tone on profit as it kept up investment in revamping stores and its website.

Boskalis Westminster sank 10.8 per cent, the worst Stoxx 600 performer, after the construction and engineering firm reported full-year earnings and said it would be a "challenge" to match 2017 results.

Axel Springer sank 10 per cent after results triggered profit taking.