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Europe ends week sharply higher after ECB easing

European markets closed sharply higher on Friday, cheering the European Central Bank's (ECB) decision to launch a full-scale bond-buying program.

The STOXX Europe 600 was ended around 1.6 percent higher on Friday, after trading in positive territory all day. All sectors ended higher apart from basic resources.

The German DAX surged to close 2 percent higher, the French CAC was not far behind ending around 1.9 percent higher, while the FTSE lagged to close up 0.5 percent.

On the week, the CAC has outperformed, posting gains of 6 percent, with both the DAX and the FTSE up over 4 percent.

Market reaction after ECB

Symbol
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Price
 
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FTSE
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DAX
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CAC
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IBEX 35
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Global markets are digesting the news that the ECB will launch a bond-buying program in March in an attempt to stimulate the deflation-hit euro zone. Corporate and government bonds will be purchased to the tune of 60 billion euros ($69 billion) a month.

Adding to bullish sentiment was data showing that business activity in the euro zone ticked up in January, a closely-watched survey showed Friday.

The ECB's program will be open-ended, but will last until at least September 2016, ECB President Mario Draghi said in his regular press conference that follows the the bank's interest rate decision (it kept rates unchanged Thursday).

Sovereign bond purchases will be subject to risk-sharing arrangements, to minimize the risk on the ECB's balance sheet. The announcement by the ECB follows weeks of speculation about the size and scale of a more aggressive stimulus program from the bank.

As markets opened Friday, data released showed the French flash composite purchasing manager's index (PMI) for January edged down to 49.5 -- below the 50-point mark that separates expansion from contraction -- down from December's final figure of 49.7. The German data was more positive, showing the flash composite PMI at 52.6 in January, up from December's final reading of 52.0.

U.S. stocks mostly dropped on Friday, with the S&P 500 halting a four-session winning run, as investors considered economic data, earnings and energy costs.

Equities trimmed losses after a report had existing-homes sales rising 2.4 percent to an annual rate of 5.04 million in December.

In other news, Saudi Arabia's King Abdullah died early on Friday and his brother Salman has become king. Investors will keep a close eye on the oil exporting nation and what the succession means for crest-fallen commodity.

West Texas Intermediate turned lower after rising more than 3 percent after the death of King Abdullah of Saudi Arabia. Brent remained higher in London trade.

Greek election eyed

In corporate news, Hutchison Whampoa is in talks to buy Telefonica's British mobile unit O2 in a deal valued at more than 10 billion pounds ($15 billion). Shares of Telefonica were trading higher by 2.5 percent on Friday, following the announcement.

Meanwhile, Greece is heading for a snap election this Sunday with the anti-bailout Syriza expected to win. It has widened its lead over Prime Minister Antonis Samaras' "New Democracy" party further in the polls, a survey showed Thursday, according to Reuters.

Read MoreAll Greek to me: What could happen in weekend vote

There are concerns that Syriza will renege on the country's international bailout agreement, however. Prime Minister Samaras said Thursday that Greece would be blocked from the ECB debt purchasing program if a review by the country's international creditors isn't concluded, Reuters reported.

Elsewhere, investors will be following the reaction from business leaders at the World Economic Forum in Davos, Switzerland on Friday. Follow our live blog for news and comments.

Live blog: Reaction to Saudi succession, Europe QE

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