European Markets Rallied As ECB Looks To End Bond Purchases


(RTTNews.com) - Markets in Europe got off to a weak start Thursday and remained locked in a narrow range during the first half of the session. However, the markets rallied higher in the second half of the session after the European Central Bank revealed plans to put an end to its bond purchases.

European Central Bank President Mario Draghi warned on Thursday that risks from global factors such as protectionism has increased after the bank signaled that it would end its massive bond-buying program at the end of this year.

"Uncertainties related to global factors, including the threat of increased protectionism, have become more prominent," Draghi said in the introductory statement to his press conference.

"Moreover, the risk of persistent heightened financial market volatility warrants monitoring."

Earlier on Thursday, the bank announced that it hopes to halve its monthly bond purchases to EUR 15 billion after September and to end them in December.

The Governing Council, which held the latest policy session the Latvian capital Riga, left the key interest rates unchanged. The bank said interest rates will remain at their present level at least through the summer of 2019 and beyond, if necessary.

The pan-European Stoxx Europe 600 index advanced 1.41 percent. The Euro Stoxx 50 index of eurozone bluechip stocks increased 1.37 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 1.56 percent.

The DAX of Germany climbed 1.68 percent and the CAC of France rose 1.39 percent. The FTSE 100 of the U.K. gained 0.81 percent and the SMI of Switzerland finished higher by 0.65 percent.

In Frankfurt, Volkswagen rose 1.68 percent after German prosecutors imposed a 1 billion euros fine on the automaker in connection with its emissions-cheating scandal.

Bertrandt Group lost 2.83 percent after posting disappointing first-half financial results.

Leasing company Grenke sank 2.44 percent after announcing a capital increase.

In Paris, Renault rose 1.46 percent. The Financial Times reported that Carlos Ghosn is likely to step down as chief executive of the company before his term ends in 2022.

In London, Rolls Royce Holdings advanced 6.54 percent on a Bloomberg report that the jet engine manufacturer plans to eliminate about 4,000 jobs as part of efforts to simplify its business and boost profit margins.

Aveva Group surged 12.01 percent. The company's fiscal 2018 profit before tax, on a statutory basis, dropped 8.8 percent, but it maintained its proposed final dividend at 27.0 pence per share.

Unilever dropped 2.81 percent after it confirmed that it continues to expect underlying sales growth in the 3 percent - 5 percent range for the full year. The company also said it is extremely unlikely to be included in FTSE UK series.

Industrial production in China was up 6.8 percent on year in May, the National Bureau of Statistics said on Thursday. That was shy of expectations for 7.0 percent, which would have been unchanged from the April reading.

Germany's consumer price inflation accelerated, as initially estimated, on energy prices in May, final data from Destatis showed Thursday.

Consumer prices climbed 2.2 percent year-on-year in May, faster than the 1.6 percent increase in April but in line with the estimate published on May 30. The last time the inflation rate reached this level was in February 2017.

France's consumer price inflation accelerated as initially estimated in May, latest figures from the statistical office Insee showed Thursday. Consumer prices climbed 2.0 percent year-over-year in May, faster than April's 1.6 percent rise. That was in line with the flash data published on May 31.

UK retail sales growth accelerated more than expected in May, figures from the Office for National Statistics revealed Thursday. Retail sales volume including auto fuel, grew 1.3 percent month-on-month, following April's 1.8 percent increase. This was the second consecutive rise in sales and much bigger than the expected 0.5 percent.

UK house price balance improved more than expected in May, reports said citing the Royal Institution of Chartered Surveyors on Thursday. The house price balance rose to -3 percent in May from -7 percent in April. The expected level was -5 percent.

Reflecting strong sales growth throughout much of the sector, the Commerce Department released a report on Thursday showing a much bigger than expected increase in U.S. retail sales in the month of May.

The Commerce Department said retail sales jumped by 0.8 percent in May after climbing by an upwardly revised 0.4 percent in April. Economists had expected retail sales to rise by 0.4 percent compared to the 0.3 percent increase originally reported for the previous month.

A report released by the Labor Department on Thursday showed an unexpected decrease in first-time claims for U.S. unemployment benefits in the week ended June 9th. The report said initial jobless claims edged down to 218,000, a decrease of 4,000 from the previous week's unrevised level of 222,000. Economists had expected initial jobless claims to inch up to 224,000.

Import and export prices in the U.S. both increased by more than anticipated in the month of May, the Labor Department revealed in a report released on Thursday.

The Labor Department said import prices climbed by 0.6 percent in May, matching the upwardly revised increase in April. Economists had expected import prices to rise by 0.5 percent.

Export prices also increased by 0.6 percent in May, matching the growth reported for the previous month. Export prices had been expected to rise by 0.3 percent.

Business inventories in the U.S. increased in line with economist estimates in the month of April, according to a report released by the Commerce Department on Thursday. The Commerce Department said business inventories rose by 0.3 percent in April following a revised 0.1 percent dip in March.

Economists had expected inventories to rise by 0.3 percent compared to the virtually unchanged reading originally reported for the previous month.


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