AFP/London


European equities rebounded sharply yesterday, buoyed by a wave of optimism that the ECB

will take new stimulus measures soon and bright data on the US economy, analysts said.
London’s benchmark FTSE 100 index rallied 2.34% to end the day at 6,569.96 points, as

investors shrugged off news that the Bank of England held British interest rates again at

a record-low level of 0.50%.
In Paris the CAC 40 soared 3.59% to close at 4,260.19 points, while Frankfurt’s DAX 30

index shot up 3.36% to 9,837.61 and Milan’s FTSE Mib jumped 3.69%.
“Shares in Europe have once again rallied strongly as expectations of continued low rates

and an improving US economy help underpin risk appetite,” said Jasper Lawler, market

analyst at CMC Markets.
However, the euro nosedived under $1.18 to reach the lowest level in more than nine years,

hit by mounting speculation that the European Central Bank could launch quantitative

easing to counter deflation.
The European single currency plunged to $1.1754 - the lowest level since the beginning of

December 2005. It later stood at $1.1810.
“Optimism over more ECB stimulus may have helped equities but the prospect of further

central bank easing was detrimental for the euro, which slid to a new nine-year low,” said

ETX Capital analyst Daniel Sugarman.
Back in London, Britain’s biggest retailer Tesco topped the risers board as the

supermarket chain unveiled a new restructuring aimed at reviving its fortunes.
The group, which did not outline potential job losses, will overhaul central overheads to

deliver £250mn ($377mn, €319mn) of savings per year.
Tesco shares skyrocketed nearly 15% to close at 209.25 pence, although it also revealed

sliding sales in the key Christmas trading period.
On the downside, clothing-to-food retailer Marks and Spencer topped the fallers board,

sinking 3.52% to close at 445.90 pence.
M&S sales slid 1.6% in the 13 weeks to December 27, as clothing was hit by unseasonably

warm autumn weather in the third quarter.
The Milan market got a boost from bank shares after speculation mounted that a domestic or

foreign bank may try to take over troubled Monte dei Paschi bank, possibly by giant

Spanish bank Santander, which made a surprise announcement yesterday that it is seeking to

raise 7.5bn euros in fresh funds.
BMPS shares soared 12.4% to 0.52 cents.
European equities had bounded higher Wednesday as weak eurozone inflation data sparked

speculation the European Central Bank (ECB) will undertake additional stimulus measures.
Investor sentiment was bolstered by data showing consumer prices in the eurozone fell in

December for the first time since October 2009, at the height of the financial crisis.
The news, raising fears the bloc is about to slip into a deflationary spiral, fuelled

expectations the ECB will embark on a vast bond-buying programme known as quantitative

easing (QE).
And in a rare glimmer of good news, data released yesterday showed eurozone retail sales

rose by 0.6% in November compared with October.
US stocks were up in midday trading in New York yesterday following a drop in new jobless

benefits claims that pointed to a further strengthening of the world’s top economy.
The Dow Jones Industrial Average rose 1.64% to 17,877.48 points, while the broad-based S&P

500 surged 1.61% to 2,058.55 and the tech-rich Nasdaq Composite Index gained 1.83% to

4,730.84.
US stocks had jumped on Wednesday after solid US economic data, snapping a five-day losing

streak.

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