GO
Loading...

Europe shares close higher for second day on stimulus hopes

European stocks closed higher for a second day in a row on Wednesday amid hopes the European Central Bank (ECB) and the People's Bank of China (PBoC) could provide monetary stimulus to boost economic growth.

Meanwhile, Lloyds Bank shares fell after the U.K. government said it would sell more of its stake in the bailed-out lender, with the FTSE 100 under-performing the rest of the continent, closing flat after paring earlier gains.

Stimulus coming?

The pan-European FTSEurofirst 300 Index provisionally closed higher by 0.6 percent at 1,318.73 points -- having hit its highest level since March 12 -- in a broad-based rally on the continent. This followed a strong finish for stocks on Tuesday, with stimulus hopes helping to boost the "risk-on" sentiment.

Bundesbank President Jens Weidmann — who is also a member of the ECB Governing Council — told newswire MNI that an asset-purchase, or quantitative-easing (QE), program had not been ruled out, as the central bank attempts to fight low inflation.

Meanwhile, the prospect of a reserve requirement ratio cut by the Chinese central bank remained in focus, following a disappointing reading of March factory activity.

"The bets are growing that further stimulus measures across Europe and China will be introduced over the coming months, as both the ECB and the PBoC look to give confidence and economic growth a further nudge," Evan Lucas, a market strategist at IG markets, said in a research note.

(Read more: ECB's Weidmann says QE not out of the question)

Symbol
Name
Price
 
Change
%Change
Volume
FTSE
---
DAX
---
CAC 40
---
IBEX 35
---

Ukraine concerns ease

U.S. stocks continued to rise on Wednesday, with benchmark indexes extending gains into a second day. It came after data showed orders for longer-lasting products gained more than expected, even as corporate spending on equipment declined.

"The headline-beating 2.2 percent jump in orders for new durable goods in February was driven by a rebound in the transport sector. Stripping out that volatile component saw orders rise by a more humble 0.2 percent," noted Andrew Wilkinson, chief market analyst at Interactive Brokers.

"Relative to expectations the report showed pockets of strength, but failed overall to signal the final passage of a cruel winter," he added.

Financial-data firm Markit reported that the U.S.'s Purchasing Managers Index hit 55.8 in March, up from 54.1 a month earlier.

(Read more: US stocks end higher for first session in three on confidence data)

Meanwhile, investor concerns over tensions in Ukraine -- which caused stocks to fall on Monday -- seem to have eased for the time being. This came as the West looked ready to hold off on further sanctions unless President Vladimir Putin goes beyond the seizure of the Crimean Peninsula.

U.S. President Barack Obama told the EU on Wednesday that it needed to reduce its energy dependency on Russia, although it could not rely on the U.S. entirely. Obama said concluding a new EU/U.S. trade pact would make it easier for Washington to licence more gas exports.

On the data front, German consumer morale looks to be holding steady, according to an April GfK consumer climate survey on Wednesday. The figure for the month ahead was 8.5 which was flat from March and met expectations. The German DAX closed up 1.1. percent.

Lloyds shares drop

Shares of Lloyds Banking Group fell 5.2 percent on Wednesday after the U.K. government said that it would sell a further 7.5 percent stake in the bank, worth about 4.2 billion pounds ($6.9 billion).

(Read more: UK to sell Lloyds Bank shares worth $6.9 billion)

Standard Life shares closed the day higher by around 7 percent after the British insurer announced the acquisition of Ignis Asset Management for $643.71 million.

Shares of Mediaset provisionally closed higher by 3.9 percent after reporting a return to profit on Tuesday evening, thanks to cost cutting and lower impairments.

Follow us on Twitter: @CNBCWorld

Contact EU

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More