By Barbara Kollmeyer, MarketWatch
European stocks got a boost on Thursday after the European Central Bank cut its deposit rate and pledged open-ended asset buying, in a bid to lift the ailing regional economy.
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -0.78% went from flat to a gain of 0.4% to 391.31.
While investors had been expecting further monetary easing from the ECB, the news was still largely cheered. The deposit rate was reduced further into negative territory, dropping by 10 basis points to negative 0.5%, while also announcing it would restart its monthly bond-buying program.
The ECB also said interest rates would remain at “present or lower levels” until the inflation outlook “robustly” converges with the bank’s target inflation rate of near, but just below 2%. It also adjusted its targeted long-term refinancing operations to further spur lending and introduced a tiered system that would exempt a chunk of excess reserves parked by banks with the ECB from the negative rate. Banks though, initially rose in Europe, then gave up gains, with Banco Santander /zigman2/quotes/205677933/delayed ES:SAN -2.54% /zigman2/quotes/202859081/composite SAN +4.60% dropping 0.5%.
Investors will now be watching a news conference with ECB President Mario Draghi at 2:30 p.m. Still, some said the fresh stimulus may not be enough to boost the region’s economy. “It remains doubtful...that this will do much to reboot the euro-zone economy let alone achieve the near-2% inflation target,” said Andrew Kenningham, chief Europe economist.
The German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.64% rose 0.3% to 12408.95, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.84% rose 0.5% to 5647.26 and the U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -1.33% gained 0.3% to 7340.93.
Stocks in the pharmaceutical, chemicals and beverages led the gainers, while energy names such as Total SA /zigman2/quotes/201824152/composite TOT +1.59% /zigman2/quotes/206172043/delayed FR:FP -0.59% and BP PLC /zigman2/quotes/207305210/composite BP +0.86% /zigman2/quotes/202286639/delayed UK:BP -1.82% lost ground.
U.S. stock futures /zigman2/quotes/209948968/delayed ES00 -0.43% rose on the heels of the 6th-straight gain for the Dow industrials /zigman2/quotes/210598065/realtime DJIA +0.36% and the 5th-straight win for the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.45% on Wednesday. Stock futures got a boost after U.S. President Donald Trump tweeted that he would delay tariff hikes against China until October 15. That comes a day after China announced a list of 16 U.S. products that would be exempt from a coming round of its own tariff hikes.
Of companies in the spotlight, shares of Alstom SA /zigman2/quotes/209823934/delayed FR:ALO -0.17% tumbled nearly 5% after French telecoms group Bouygues SA /zigman2/quotes/202035785/delayed FR:EN -0.19% said it has sold a 13% stake in the French multinational group
Anheuser-Busch InBev /zigman2/quotes/209225053/composite BUD +2.33% /zigman2/quotes/203831500/delayed BE:ABI +0.13% shares jumped 3.5% amid reports the parent of beer giant Budweiser is planning to list a slimmer version of its Asia unit.
In London, shares of British American Tobacco /zigman2/quotes/207081878/composite A +0.65% rose 1.8% after the company said it would lay off 2,300 employees by 2020. And the London Stock Exchange /zigman2/quotes/206625606/delayed UK:LSE +0.38% 0.6% after the Financial Times reported the group would reject a nearly $40 billion (30 billion pounds) buyout offer from Hong Kong Exchanges and Clearing.