European Stocks Close Higher As Traders Reactive Positively To Policy Announcements

(RTTNews) - European stocks closed on a firm note on Thursday with investors reacting positively to the policy announcements from the Federal Reserve, the European Central Bank and the Bank of England.

In addition to digesting the monetary policy announcements and a slew of economic data from the region, investors continued to track updates about the Omicron variant of the coronavirus as well.

The Bank of England today raised its key interest by 0.15 percentage points as policymakers viewed that some moderate tightening is required to bring inflation down. The committee unanimously decided to maintain the bond purchase programme at GBP 895 billion.

The European Central Bank today announced a reduction in support for the euro zone economy by another notch but promised copious support for 2022. The bank also indicated that any exit from years of ultra-easy policy will be slow.

ECB President Christine Lagarde said policymakers are unlikely to raise interest rates next year after the bank unveiled plans to start tapering its stimulus in March.

Inflation is seen slowing to 1.8% in 2023 versus the earlier forecast of 1.5%. The inflation estimate for this year was lifted to 2.6% from 2.2%.

Eurozone inflation forecast for next year was raised sharply to 3.2 percent from 1.7 percent, the latest set of ECB staff macroeconomic projections unveiled by Lagarde showed.

On Wednesday, the Federal Reserve held its rates and said it would double the speed of the tapering of its bond purchasing program and projected three rate hikes in 2022

The pan European Stoxx 600 climbed 1.23%. The U.K.'s FTSE 100 gained 1.25%, Germany's DAX advanced 1.03% and France's CAC 40 surged up 1.12%, while Switzerland's SMI moved up 2.07%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Poland, Russia, Spain, Sweden and Turkey closed with sharp to moderate gains.

Czech Republic, Iceland and Portugal closed modestly higher.

In the UK market, Hargreaves Lansdown surged up nearly 5% and Lloyds Banking Group gained 4.6%. Standard Chartered, Ocado Group, HSBC Holdings, Smiths Group, Antofagasta, Royal Mail, Ashtead Group, Darktrace and Barclays gained 3 to 4%.

In the French market, Technip climbed more than 4%. Unibail Rodamco, Airbus, STMicroElectronics, Danone, Capgemini, Michelin, Renault, Thales and Societe Generale gained 2 to 3%.

In Germany, Munich RE, Deutsche Bank, E.ON, Fresenius, Covestro, Bayer, BASF, Daimler, Fresenius Medical Care, BMW, Sartorius, HeidelbergCement, RWE and SAP gained 1 to 3%.

In the Switzerland market, Swiss Re gained about 1.3% after appointing new digital chief in a management shake-up.

Novartis shares climbed nearly 6% after the company launched a new share buyback worth up to $15 billion to be executed by the end of 2023.

In other economic news from Europe, the Swiss National Bank maintained its expansionary monetary policy, as widely expected. Policymakers of the central bank decided to retain the policy rate and interest on sight deposits at the SNB at -0.75%.

Eurozone private sector growth eased to a nine-month low at the end of the year as rising coronavirus infection rates hit service sector activity, offsetting improved manufacturing growth, flash survey results from IHS Markit showed on Thursday.

The flash composite output index came in at 53.4 in December, down from 55.4 in November. The reading was also below the expected level of 54.0. Nonetheless, a score above 50.0 indicates expansion.

Germany's private sector recovery came to a halt at the end of 2021 amid efforts to contain the latest wave of COVID-19 infections, flash survey data from IHS Markit showed on Thursday.

The flash composite output index declined to 50.0 in December from 52.2 in the previous month. The score was forecast to fall moderately to 51.0.

France's private sector grew at a slower pace in December, flash survey results from IHS Markit showed on Thursday.

The flash composite output index fell to 55.6 in December from 56.1 in the previous month. Nonetheless, a score above 50.0 indicates expansion. The reading was also above the economists' forecast of 53.6.

The UK private sector posted a sharp slowdown in December amid tighter pandemic restrictions and renewed business uncertainty, flash survey results from IHS Markit showed. The flash Chartered Institute of Procurement & Supply composite output index fell more-than-expected to 53.2 in December from 57.6 in November. The expected score was 56.4.

The services Purchasing Managers' Index came in at a 10-month low of 53.2, down from 58.5 in the previous month and economists' forecast of 57.0. The manufacturing PMI slid to a three-month low of 57.6 in December, in line with expectations, from 58.1 in the prior month.