European stocks lifted by ECB’s low rate pledge

EUROPEAN stocks posted their biggest one-day jump in 11 months yesterday after central banks in Britain and the Eurozone signalled that, unlike the United States, they are in no hurry to unwind stimulus.

The Bank of England, under new governor Mark Carney, surprised markets by saying investors had been too quick to price in future rises in interest rates.

European Central Bank President Mario Draghi then said rates would remain low and might be cut further, while the exit from stimulus was very distant.

The comments offered reassurance to equity markets spooked in recent weeks by signs the US Federal Reserve is moving closer to scaling back stimulus.

“That’s clearly another tick in the box in favour of European equities relative to U.S. equities,” said Patrick Moonen,of ING Investment Management.

“We closed the underweight (on European equities) a couple of days ago and the next step is to go overweight Europe versus the US, based on valuation, based on relative economic indicators and based on relative monetary policy.”

The FTSEurofirst 300 rallied 2.44 per cent to 1,178.99 points – its biggest rise since August 2012.

The Eurozone’s EuroSTOXX 50 benchmark gained 3 per cent to 2,646.54 points with volumes at 104 per cent of the 90-day daily average despite a US public holiday.

Banks – which are the most direct beneficiaries of ample central bank liquidity and access to cheap funds – were among the top performers, rising 3.8 per cent.