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European stocks close higher after aggressive ECB stimulus; banks up 2%

Key Points
  • The ECB announced a new quantitative easing program Thursday which will see 20 billion euros ($21.9 billion) per month of net asset purchases for as long as the central bank deems necessary.
  • The central bank also cut the interest rate on its main deposit rate by 10 basis points to -0.5%.
  • Global markets also received a boost after President Donald Trump said on Thursday he would not rule out an interim trade deal with China, after the world's two largest economies showed signs of thawing their ongoing trade war.

European stocks edged higher on Friday afternoon after the European Central Bank (ECB) delivered an aggressive stimulus package in a bid to reinvigorate the ailing euro zone economy.

European Markets: FTSE, GDAXI, FCHI, IBEX

The pan-European Stoxx 600 closed 0.4% higher, banks and basic resources emerging as the best performing sectors with roughly 2.8% in gains while food and beverage stocks dropped 1.9%.

The ECB announced a new quantitative easing program Thursday which will see 20 billion euros ($21.9 billion) per month of net asset purchases for as long as the central bank deems necessary. It also cut the rate on its main deposit facility by 10 basis points to -0.5%, a new record low, and introduced tiering measures to mitigate damage to banks' balance sheets.

Global markets also received a boost after President Donald Trump said Thursday he would not rule out an interim trade deal with China, after the world's two largest economies showed signs of thawing their ongoing trade war.

Asian stocks advanced on both trade optimism and the ECB stimulus "bazooka" with Japan's Nikkei leading gains, while mainland Chinese and South Korean markets were closed Friday for holidays.

In corporate news, the London Stock Exchange (LSE) board will meet in the coming days to decide on the Hong Kong stock exchange's surprise $36.6 billion takeover proposal, according to Reuters.

Deutsche Bank will pay $15 million to resolve bond-rigging lawsuits concerning the prices of bonds issued by U.S. enterprises Fannie Mae and Freddie Mac, becoming the first of 16 financial services firms to settle litigation by investors.

However, the German lender did not admit wrongdoing in its agreement to the settlement, which also stipulates that it reinforce its antitrust compliance procedures.

On the data front, the euro zone's trade surplus in goods with the U.S. hit a record high in July. Exports to the U.S. rose to 32.8 billion euros, their highest level since records began in 1999, while imports into the bloc from the U.S. rose to 18 billion euros.

Stocks on the move

Spanish bank shares topped the Stoxx 600 by the afternoon, with Caixabank stock rising 6.9% and Banco De Sabadell gaining 7.4%. Commerzbank, RBS and Barclays all added more than 5% to lead the European banking index higher.

At the bottom of the blue chip index, shares of infrastructure giant Atlantia tumbled 7.9% after Italian tax police revealed the arrests of three officials of the company's units, in an inquiry into falsified reports over motorway viaducts' safety checks.