By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- Markets in Spain and Italy outperformed
European markets on Thursday as investors took comfort in a speech
by European Central Bank President Mario Draghi who supported the
view that rates would stay low in the region while the recovery
continued to find its footing.
The ECB and the Bank of England both left monetary policies
steady as expected, and the Stoxx Europe 600 index rose 0.2% to
330.46, hovering around five-year highs.
Shares of Wm. Morrison Supermarkets topped the decliners list
with an 8% drop after the retailer reported a disappointing
performance over the Christmas period and said full-year underlying
profit would be at the bottom of the range of current market
forecasts.
TGS-NOPEC Geophysical Company ASA surged 13% after the
Norway-based provider of multi-client geoscience data said net
revenues for 2013 will come in higher than expected, at $882
million, due to record-high late sales in the fourth quarter.
Shares of Finnish-based Waertsilae Oyj jumped 10% after the
maker of engines for tankers, cruise and navy ships said it's no
longer in talks about a potential tie-up with Rolls-Royce Holdings
PLC .
Stocks rose after ECB President Mario Draghi said at a press
conference that the central bank will be ready to act when it
believes the inflation outlook is changing for the worse. Data
earlier this week showed annual inflation across the euro zone fall
further below the ECB's target in December, while other numbers
showed the fastest rise in retail sales in 12 years during
November. Watch our Live blog of the ECB press conference
"By and large we don't see a deflation in the Japanese sense of
the 90s," said Draghi.
"Draghi has once again strengthened his commitment to keeping
interest rates low in a bid to quell growing fears that any rise
may derail the euro zone's recovery," said Max Cohen, financial
sales trader at SpreadEx in emailed comments. "The decision to hold
the main refinancing rate at 0.25 was completely expected, but
Draghi did stress that if the medium-term outlook for inflation
worsens, the ECB could cut rates further."
Data Thursday showed economic sentiment across the region rising
to a more than two-year high in December.
In the U.K., the Bank of England's Monetary Policy Committee
also held steady on its bond-buying program and key lending
rate.
Peripheral euro-zone markets repeated their outperformance, with
the Spain IBEX 35 index up 0.8% to 10,341.80, while the FTSE MIB
Italy index jumped 1.3% to 19,6970. Shares of banks were in the
driver's seat as the regions hardest-hit by the crisis attracted
renewed interest from investors, who were more convinced of the
recoveries as borrowing costs have dropped.
The FTSE 100 index was flat at 6,722.52, supported by a 1% rise
for BP PLC (BP).
Technology stocks were active after a note from Deutsche Bank.
The investment bank downgraded shares of ARM Holdings PLC (ARMHY)
to hold from buy, saying it's waiting for better entry points. It
also cut Alcatel-Lucent SA (ALU) to hold from buy, with Deutsche
Bank analysts saying a deteriorating mix will put incremental
pressure on gross margins. Shares of ARM Holdings slid 4.6%, and
Alcatel-Lucent dropped close to 5%.
Deutsche Bank reiterated its buy rating on ASML Holding NV
(ASMLD) , saying expectations have already moderated for the group.
Shares of ASML rose 1.7%.
Among other indexes, the German DAX 30 was flat at 9,502.02,
with Daimler AG gaining 0.9%. Shares of Fresenius Medical Care AG
& Co. gained 1.8% after it was lifted to neutral from
underweight at J.P. Morgan Cazenove. The investment bank raised
Fresenius SE to overweight from neutral, and shares rose 1.2%.
Analysts said the European medical technology and services sector
should face fewer headwinds than in 2013.
The French CAC 40 index eased 0.1% to 4,255.05, with shares of
Alcatel-Lucent among those weighing on the downside.
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