European Markets Rallied Higher After ECB Stimulus Announcement

(RTTNews) - The majority of the European markets finished sharply higher Thursday, after the European Central Bank announced stimulus measures that exceeded expectations. The markets extended their gains from the previous five sessions and finished at new highs. Following the long anticipated QE announcement, investors will now begin to shift their focus to the upcoming Greek elections on Sunday.

ECB President Mario Draghi announced the stimulus program, which he hopes will combat the threat of deflation and revive the euro area economy. Under the plan, the combined monthly purchases of public and private sector securities will amount to EUR 60 billion. The size of monthly asset purchases exceeded the EUR 50 billion reported in the press since Wednesday. The purchases are slated to begin in March.

The asset purchases are intended to be carried out until end-September 2016. They will remain in place until there is "a sustained adjustment in the path of inflation which is consistent with" the ECB's aim of achieving inflation rates below, but close to, 2 percent over the medium term, Draghi said in his customary post-decision press conference in Frankfurt.

The main refi rate was kept at a record low 0.05 percent and the deposit rate at -0.20 percent. The marginal lending rate was retained at 0.30 percent.

U.K. inflation may temporarily dip below zero in coming months but there is no strong case for expansionary measures, Bank of England policymaker David Miles said Thursday. In a speech in Edinburgh, Miles said although inflation is now very low, and might temporarily dip down to zero and turn slightly negative, this is a long way from the sort of deflation trap that is really worrying.

Further, "I don't think that lower inflation than seemed likely six months ago means that more expansionary policy is now needed," he said. But it does mean that there is no great urgency in starting the process of moving monetary policy back towards a more normal setting, he added.

The Euro Stoxx 50 index of eurozone bluechip stocks increased 1.71 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 1.40 percent.

The DAX of Germany climbed 1.32 percent and the CAC 40 of France rose 1.52 percent. The FTSE 100 of the U.K. gained 1.02 percent, but the SMI of Switzerland dipped 0.11 percent.

In Frankfurt, Commerzbank climbed by 3.05 percent. The lender plans to cut about 100 jobs in London and move another 340 as it concentrates foreign exchange and interest-rate trading in Frankfurt, Bloomberg reported. Deutsche Bank added 2.98 percent.

BMW advanced by 3.56 percent. Its i3 electric car has been named as Wheels magazine's Car of the Year. Daimler increased by 3.14 percent and Volkswagen gained 2.13 percent.

In Paris, Societe Generale climbed by 3.72 percent. BNP Paribas gained 2.34 percent and Credit Agricole added 3.44 percent.

Total advanced by 1.38 percent and Technip rose by 2.55 percent.

In London, Royal Mail increased by 3.55 percent. The company expects to meet its forecasts after delivering 120 million parcels during December, up 4 percent from a year earlier.

Energy giant BG Group gained 2.82 percent and Tullow Oil added 0.99 percent. OPEC Secretary-General Abdullah al-Badri defended the cartel's decision not to cut output in November, saying "the price will rebound and we will go back to normal very soon."

Financial Times publisher Pearson climbed by 1.70 percent, after saying it expects to return to earnings growth in 2015.

RSA Insurance Group rose by 3.32 percent. Credit Suisse upgraded the stock to "Outperform" from "Neutral."

The Eurozone government debt to gross domestic product ratio declined in the third quarter, Eurostat reported Thursday. At the end of the third quarter of 2014, government debt to GDP came in at 92.1 percent versus 92.7 percent in the second quarter. In the same period of last year, the ratio was at 91.1 percent.

Spain's unemployment rate remained largely unchanged at a three year low in the fourth quarter, the statistical office INE said Thursday. The jobless rate came in at 23.7 percent in the fourth quarter, slightly up from 23.67 percent in the third quarter. The rate was forecast to fall to 23.53 percent. In the fourth quarter of 2013, the rate was at 25.73 percent.

The unemployment rate in the third quarter was the lowest since the fourth quarter of 2011, when it was at 22.56 percent.

Italy's retail sales increased for the first time in seven months in November, the statistical office Istat showed Thursday. Retail sales grew 0.1 percent from October, when it remained flat. The growth rate came in line with economists' expectations. This was the first monthly rise since April.

The U.K. budget deficit increased in December from last year, the Office for National Statistics said Thursday.

Public sector net borrowing excluding public sector banks totaled GBP 13.1 billion, an increase of GBP 2.9 billion or 27.8 percent from last year. The deficit was forecast to fall to GBP 9.7 billion.

While the Labor Department released a report on Thursday showing a modest drop in first-time claims for U.S. unemployment benefits in the week ended January 17th, initial jobless claims still came in above economist estimates.

The report said initial jobless claims fell to 307,000, a decrease of 10,000 from the previous week's revised level of 317,000. Economists had expected jobless claims to slide to 300,000 from the 316,000 originally reported for the previous week.