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Europe close: Stocks continue to grind higher on back of ECB stimulus

By Alexander Bueso

Date: Thursday 12 Sep 2019

Europe close: Stocks continue to grind higher on back of ECB stimulus

(Sharecast News) - European stocks continued their grind higher towards their best levels of the year after the European Central Bank unveiled a new raft of stimulus measures, including another round of debt purchases or so-called 'quantitative easing', and with ECB chief Mario Draghi also calling on governments to step in with fiscal spending.
To take note of nevertheless, it was later revealed that the central bank governors from Austria, France, Estonia, Germany and the Netherlands had opposed further QE.

In any case, the main stockmarket indices finished off their intraday highs after the US President tweeted that it was expected that China would purchase large amounts of American agricultural products, although they later recovered some of the lost ground.

By the end of trading, the pan-European Stoxx 600 index was 0.20% higher at 390.48 as the French CAC 40 added 0.44% to 5,642.86 - hitting a fresh 52-week high in the process - and Germany's Dax rose by 0.41% to 12,410.25. Meanwhile, London's FTSE 100 edged higher by 0.09% to finish at 7,344.67.

Mimicking the action in stock markets, yields on 10-year German bunds rose by five basis points to -0.52%, but only after having earlier fallen as low as -0.65%.

Similarly, euro/dollar initially fell but ended the session up by 0.49% to 1.10632.

In the background meanwhile, several analysts sounded a very skeptical note on the likelihood of a US-China trade deal.

Included among them were those from Rabobank, who told clients: "Although this week has brought indications of a softening in the stance of both the US and the Chinese governments on the trade front, clearly there is risk of disappointment with neither government having an incentive to back away from a tough stance.

"Overall we anticipate that tensions on some levels between the US and China are likely to linger."

Elsewhere on the economic front, the Munich-based think-tank Ifo said Germany is heading for a recession as it predicted the economy will contract by 0.1% in the third quarter and trimmed its 2019 growth estimates from 0.6% to 0.5%.

Eurozone industrial production figures from Eurostat also weighed on sentiment in the early part of the session, showing a 0.4% drop on the month in July compared to a revised 1.4% drop in June, and missing expectations of a smaller 0.1% dip.

Among individual stocks, Polish fashion retailer LPP led Stoxx 600's risers, climbing 6% after it reported a jump in second-quarter net profit and revenue following e-commerce and store development success.

UK supermarket chain Morrisons was also on the way up after it extended its partnership with Amazon, paid a special dividend and achieved 5% growth in interim profits.

Anheuser-Busch InBev racked up gains following reports that it is looking to raise $5bn in an initial public offering for its Asian Budweiser Brewing Co. unit in Hong Kong.

On the downside, shares in French rail company Alstom slipped after telecoms group Bouygues sold a 13% stake in the group.

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