(MENAFN- Gulf Times) Stubbornly low inflation in the eurozone helped perk up equities yesterday as an indication that the ECB will likely only slowly reduce its easy money policies to support the economy.
'An easing of trade war tensions and further evidence of low inflation generated some optimism for European shares while the euro sunk for a third day to a two-week low, said Jasper Lawler, head of research at London Capital Group.
The final eurozone inflation reading for February came in at 1.1%, a drop from the initial reading of 1.2%, and considerably below the European Central Bank's target of just under 2.0%.
'Eurozone inflation trickling along at nearly half of the ECB's target implies a very gradual removal of the punchbowl.
That's a clear positive for risky assets, said Lawler.
The ECB has only been inching towards an exit from its stimulus programme, the main element of which is buying €30bn of bonds per month until at least September.
'Clearly whatever the ECB is doing to get that CPI (consumer price index) figure creeping higher isn't working, news that helped send the...DAX and CAC up, said Connor Campbell, analyst at Spreadex traders.
Frankfurt stocks climbed 0.4% at 12,389.58 points, helped by shares in Siemens' Healthineers unit surging more than 8% after the industrial giant raised €4.2bn in an initial public offering.
Meanwhile, Paris shares added 0.3% at 5,282.75 points and outside the eurozone, the London FTSE 100 index also rose 0.3% at 7,164.14 points. The EURO STOXX 50 closed 0.7% up at 3,438.78 points.
Across the Atlantic, US stocks were also higher in midday trading, with the Dow up 0.4%, as investors tried to shrug off worries about US trade policy and upheaval in the White House.
'The bullish sentiment is relatively small but it reflects the fading fears about a potential trade war with China, said market analyst David Madden at CMC Markets.
US stocks have come under pressure this week amid talk of additional US tariffs and as President Donald Trump has shaken up his Cabinet, replacing Rex Tillerson as Secretary of State with Mike Pompeo and reportedly planning to replace National Security Advisor HR McMaster.
London Capital Group's Lawler said investors are 'encouraged by the appointment of free-trade advocate Larry Kudlow as Trump's top economic adviser.
Attention now turns to the Federal Reserve's monetary policy meeting next week.
A rate rise is expected but its statement and new bank boss Jerome Powell's comments will be pored over for clues about future hikes with speculation it could announce three more this year.
Oil prices climbed, with traders reassured that with Vladimir Putin's all-but-assured re-election this weekend that Russia should continue to restrain output along with Opec, thus helping prop up prices.
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