AFP

European shares shot up yesterday after the ECB signalled it is ready to act quickly to deter deflation and China cut interest rates for the first time in more than two years.

London’s benchmark FTSE 100 index climbed 1.08% to close at 6,750.76 points, while the DAX 30 in Frankfurt rose 2.62% to 9.732.55 and Paris’s CAC 40 gained 2.67% to 4,347.23.

Madrid shot up 3.05%, Milan 3.88% and Athens 3.67%.

However, the euro slumped on the prospect of more easy money being injected into the eurozone, falling to $1.2405 from $1.2540 late on Thursday.

“Markets in Europe took a double dose of stimulus in early trading on Friday which set the tone for the entire day,” said analyst Jasper Lawler at CMC Markets UK.

“Mario Draghi again implied the ECB is moving towards full quantitative easing and shortly afterwards China cut interest rates for the first time in two years sending commodities and risky assets flying,” he said.

The euro retreated “sharply on the back of Draghi’s comments as he once again sets the stage for a potential” announcement on stimulus, said Kathleen Brooks, analyst at Forex.com trading group. It also fell against the pound, dropping to 79.12 pence from 79.90 late on Thursday.

The pound slid to $1.576 from $1.5694

Meanwhile, the yen pulled off multi-year lows, clawing back some of its losses over the past week.

The dollar bought ¥117.63 compared to 118.22 late on Thursday, while the euro bought ¥145.91, down from 148.25.

In Beijing, the People’s Bank of China (PBoC) cut its one-year deposit rate by 0.25 of a percentage point to 2.75% and reduced the one-year lending rate by 0.40 of a percentage point to 5.6%.

Shares in mining companies that supply Chinese factories with raw materials surged on the news.

In London, Anglo American soared 6.7% 1,380 pence, Rio Tinto jumped 6.2% to 3,042 pence and BHP Billiton gained 5.0% to 1,662 pence.

The Dow Jones Industrial Average was up 0.64% to 17,832.03 points in midday trading.

The broad-based S&P 500 gained 0.57% to 2,064.46, while the tech-rich Nasdaq Composite Index rose 0.46% to 4,723.54.

Elsewhere on Friday, shares in French firm Bouygues rallied 3.9% to €29.97 after Altice, the parent company of cable operator Numericable, showed interest in its telecoms subsidiary, signalling another possible tie-up in France’s mobile phone market.

Shares in French supermarket group Carrefour climbed 3.1% to €25.30 after it got regulatory approval to acquire the 800 stores in the troubled French unit of Spanish discount supermarket group Dia.

 

 

 

 

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