European stock markets opened higher on Thursday, breaking two days of losses, after pro-stimulus remarks by nominee Federal Reserve chairwoman Janet Yellen helped take the sting out of disappointing economic-growth readings for both France and Germany.
Stocks were rebounding from a loss the prior day. The Stoxx Europe 600 index rose 0.8% to 322.45, after falling 0.6% in Wednesday’s session.
The ECB’s Council stressed that the rate cut was in line with the central bank´s forward guidance on rates, introduced in July 2013, “given the currently low annual inflation rates of below 1%.”
The ECB declared its willingness to continue with the current accommodative monetary policy stance for as long as necessary, in oder to support the gradual recovery in the Eurozone.
Furthermore, the ECB suggests that the "euro area may experience a prolonged period of low inflation.”
The central bank's forecasters see Eurozone GDP contracting by 0.4% in 2013, while in 2014 the economy should expand by +1% and in 2015 by 1.5%.
The French CAC 40 index delivered the biggest gains among regional indexes, up 1%. Heavily-weighted banks also rose, with BNP Paribas SA up 2.5% and Societe Generale SA up over 1%.
German stocks shook off the losses for RWE, with the DAX 30 up 0.9%, led by a 1.5% rise for Siemens AG, while banks and auto makers also contributed to the performance of the index.
The preliminary gauges of the German GDP showed the economic activity expanding 0.3% QoQ, in line with expectations and down from the 0.5% gain from the previous quarter. Over the last twelve months, the GDP grew 1.1%, surpassing estimates.
The FTSE 100 index rose 0.8%, buffered by a 1.2% rise for Royal Dutch Shell PLC and a 1.1% gain for Rio Tinto PLC.
In UK data showed retail sales contracted 0.7% on a monthly basis and 0.6% excluding fuel, missing the median at 0.0% and -0.2%, respectively. The results were also lower than September’s 0.6% and 0.8%, respectively.
But markets only had eyes for Fed chairwoman nominee Yellen, who will testify in front of the Senate Banking Committee on Thursday. The text of her prepared remarks were released early, after the market close on Wall Street. Yellen defended the central bank’s bond-buying program, saying it was the best way to get the U.S. economy back on its feet.
Among the biggest movers, shares of Ophir Energy jumped nearly 15%, on news it sold its 20% stake in big gas discoveries in offshore Tanzania for $1.3 billion.
French building and telecommunications group Bouygues SA rose over 6% after its third-quarter operating profit rose to €542 million ($713 million), beating forecasts.
On the downside, shares of Serco Group PLC slid nearly 10%, the top decliner for the Stoxx Europe 600, after the outsourcing firm warned that adjusted operating profit for 2013 will be below market expectations.
And RWE AG fell over 5% after the German utility warned that it expects profits to fall further in 2014.
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