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March 11, 2021, 7:54 a.m. EST

European stocks and bonds extend gains after ECB says it will pick up bond purchase pace

By Steve Goldstein

European stocks traded higher on Thursday, extending gains after the European Central Bank said it would quicken the pace of bond purchases.

Up six of the last eight sessions, the Stoxx Europe 600 (STOXX:XX:SXXP) edged up 0.4%.

“Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council expects purchases under the [Pandemic Emergency Purchase Programme] over the next quarter to be conducted at a significantly higher pace than during the first months of this year,” said the ECB.

“The Governing Council will purchase flexibly according to market conditions and with a view to preventing a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation.”

The yield on the 10-year German bund (XTUP:BX:TMBMKDE-10Y) immediately dropped, sliding to -0.35%, down about 4 basis points. Yields move in the opposite direction to prices.

The yield on the U.S. 10-year Treasury (XTUP:BX:TMUBMUSD10Y) fell below 1.5% for the first time in a week after U.S. core consumer prices saw a muted rise in February, taking air out of the fears of inflation that had recently worried traders.

U.S. stock futures (CME:ES00) were stronger, particularly the technology-heavy Nasdaq-100 (CME:NQ00) , which closed lower on Wednesday.

In Europe, tech stocks including microchip equipment maker ASML (AMS:NL:ASML) , technology investor Prosus (AMS:NL:PRX) and microchip maker Infineon Technologies (ETR:XE:IFX) advanced.

Banks including HSBC (LON:UK:HSBA) and Barclays (LON:UK:BARC) traded lower as yields fell.

Also read : Eurozone banks are showing life after 15 rough years. Will the ECB snuff out the rally?

Engine maker Rolls-Royce (LON:UK:RR) rose 1%. The struggling company, which reported an underlying £4 billion loss in 2020, says it expects to be free cash flow positive in the second half of the year.

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