European stocks posted their biggest two-day gain since October 2011 on increased investor confidence that central banks would act to support markets.
The STOXX Europe 600 Index rose 3 percent to 338.36 at the close of trading, taking its two-day climb to 5 percent. It added 2.6 percent this week — its biggest such gain since November — after rising the most in a month on Friday following European Central Bank (ECB) President Mario Draghi’s signal of an increase in stimulus as early as March.
The volume of shares changing hands was 41 percent higher than the 30-day average. The VSTOXX Index measuring volatility expectations for euro-area shares slid 11 percent.
“There is hope of more stimulus in March and potential for even more stimulus in Japan and China, so if we get concrete positive economic news the rebound could last into next week,” said John Plassard, senior equity-sales trader at Mirabaud Securities LLP in Geneva. “I told my clients to fasten their seatbelts and wait for better news, and this is finally happening.”
Central banks are returning to center stage as concern over Chinese growth rocks international financial markets, and the prolonged slide in oil prices puts inflation targets out of reach. Pressure is increasing on the Bank of Japan to enlarge stimulus at its meeting next week, while China said it would keep intervening in its equity market to “look after” investors and has no intention of further devaluing the yuan.?
Speaking at the World Economic Forum in Davos, Switzerland, yesterday, Draghi said he was concerned about the outlook for eurozone inflation and reiterated the ECB’s determination to reach its price-stability mandate.
The STOXX 600 has fallen 7.5 percent this year and entered a bear market last week. Strategists are still betting on a rebound by the end of the year, with an average year-end forecast of 402 for the gauge.
A measure of energy-related companies in Europe rallied the most among the 19 industry groups on the STOXX 600 as oil rebounded, with service provider Tullow Oil PLC surging 14 percent and Seadrill Ltd rising 8.6 percent. BHP Billiton Ltd helped push a gauge of commodity producers higher, although late selloffs in Glencore PLC and Rio Tinto Group pared gains.
Among stocks moving on corporate news, Tod’s SpA gained 3.7 percent after reporting better-than-expected sales for the fourth quarter and full year. Sandvik AB rose 6.6 percent after saying it had appointed Electrolux AB chief financial officer Tomas Eliasson as its new finance chief.
Banca Monte dei Paschi di Siena SpA advanced 2.7 percent — paring earlier gains of as much as 19 percent — after saying it was bringing forward the board meeting on its results to reassure markets. Chairman Massimo Tononi separately told Italian business daily Il Sole 24 Ore that the lender has no plans for a capital increase, though he did not rule out the possibility of being helped by the Italian government.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
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