By Carla Mozee, MarketWatch
Stocks across Europe surged by the most in more than two months as the euro got walloped following the European Central Bank’s policy decision to wrap up crisis-era bond purchases by the end of 2018 and keep interest rates low for at least another year.
The ECB’s plan’s to bring its easy-money programs to an end, on the back of an improving economic picture in Europe, were widely expected. However, the euro may have gotten slammed by the degree of caution expressed by European policy makers in outlining the initiative to return to normal.
How markets are performing
The Stoxx Europe 600 Index /zigman2/quotes/210599654/delayed XX:SXXP -1.62% rose by 1.2% to 393.04, marking its best day, on a percentage basis, since April 5 and hitting its highest close since May 22, according to WSJ Market Data Group. On Wednesday, the pan-European benchmark rose 0.2%.
Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX -1.20% also flipped higher, to up 1.7% to 13,107.10, also finishing around a three week high, while France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -1.77% climbing up 1.4% to close at 5,528.46.
The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.60% rose 0.8% to 7,765.79.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.1625% bought $1.1688, pulling back from a jump to $1.1852 right after the ECB statement was released. The shared currency traded at $1.1791 late Wednesday in New York.
What’s driving markets
European bourses stepped higher after the European Central Bank said it would continue its program of buying 30 billion euros a month of bonds through September, as planned. The purchase amount will then be reduced in October to 15 billion euros a month and run through the end of December. The purchases will end in December.
The ECB also said it plans to keep reinvesting principal payments from maturing securities purchased under the asset-purchase program “for an extended period after the end of the net asset purchases” and as long as policy makers feel its necessary to provide an ample degree of accommodation.
On interest rates, the ECB said rates will remain at their present all-time lows “at least through the summer of 2019.” The Stoxx Europe 600 Banks Index /zigman2/quotes/210599339/delayed XX:SX7P -0.96% rose 0.3%, somewhat lagging larger gains for other sectors.
ECB President Mario Draghi, at a press conference in Riga, Latvia, said the central bank now sees 2018 eurozone growth at 2.1%, down from a previous forecast of 2.4%.
Mining stocks pared an earlier decline, with some finishing the session in the green, shaking off downbeat data out of China, the world’s largest buyer of copper and a major buyer of other industrial and precious metals. Business activity in China slowed in May, and readings on industrial output, retail sales and fixed-asset investment from the National Bureau of Statistics fell short of expectations.