European shares hit three-month high, focus on ECB

Record ID: 76311

  • Title: European shares hit three-month high, focus on ECB
  • Date: 8th December 2016
  • Summary: FRANKFURT, GERMANY (DECEMBER 8, 2016) (REUTERS) EXTERIOR FRANKFURT STOCK EXCHANGE EU FLAG INTERIOR FRANKFURT STOCK EXCHANGE TRADING FLOOR SIGN READING (German): "FRANKFURT STOCK EXCHANGE" TRADERS PAN ACROSS DAX CURVE TRADER ON PHONE DAX AT 11035 POINTS TRADERS BANKING SHARES TRADER BEHIND COMPUTER SCREEN DAX BOARD (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "One thing is certain: the liquidity houses, the cheap money, will continue for three years on the part of the ECB. Why? Because the economic recovery is very weak in the eurozone and the 2019 inflation will not reach the ECB target level of 2%, i.e. the interest rates remain low, the money remains high and the stock markets continue to be pushed upwards." TRADER HIGHEST DAX VALUE AT 11191 POINTS (SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "Mr Draghi (ECB Chief Mario Draghi) is pursuing the most political of money politics of all time. He knows exactly that next year there will be elections in four big euro-states, where voters can be appeased by being able to finance new economic social programs very cheaply, so that they put their vote next to the pro-European parties. Which means that Mr. Draghi will solve the financial problems, the economic problems and also the political problems." TRADERS DAX BOARD PEOPLE LOOKING AT TRADERS INTERIOR OF STOCK EXCHANGE
  • Embargoed: 23rd December 2016 17:04
  • Keywords: ECB rates stock exchange
  • Location: FRANKFURT, GERMANY
  • City: FRANKFURT, GERMANY
  • Country: Germany
  • Reuters ID: LVA0015C0TTVX
  • Aspect Ratio: 16:9
  • Story Text: European shares climbed to a three-month high on Thursday (December 8), mirroring gains on Wall Street and in Asia, with investors betting that the European Central Bank would extend its asset purchase programme after a policy meeting.
    The European Central Bank trimmed back its asset buys in a surprise move but promised protracted stimulus to aid a still fragile recovery, and dismissed any talk of tapering the programme away.
    With still no sign of a sustained rebound in underlying inflation and heightened political risk from looming elections in four of the euro zone's five biggest economies, the ECB promised to keep borrowing costs depressed longer than predicted, even reserving the right to raise back purchases if the outlook sours.
    Although the cut in the volume of monthly assets buys suggests a concession to conservative countries such as Germany and the Netherlands, the underlying message was seen as dovish, catering to nations on the periphery and a boost for financial markets.
    With elections looming in France, Germany, the Netherlands and possibly Italy, and all facing strengthening populist movements, the ECB can hardly afford to ease back on the accelerator.
    "Mr Draghi is pursuing the most political of money politics of all time," said Robert Halver, Head of Capital Markets Analysis at Baader Bank. "He knows exactly that next year there will be elections in four big euro-states, where voters can be appeased by being able to finance new economic social programs very cheaply, so that they put their vote next to the pro-European parties. Which means that Mr. Draghi will solve the financial problems, the economic problems and also the political problems."
    But much of the ECB's firepower is exhausted and Germany is growing increasingly frustrated with its unprecedented stimulus, so the bank has been under pressure to make at least a token nod to the haws, signalling that quantitative easing cannot go on forever.
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