VIENNA (dpa-AFX) - The European markets ended Thursday's session solidly to the upside. Concerns over China were put on the back burner with a 2-day holiday shuttering the Chinese stock market. Dovish comments from ECB President Mario Draghi and hints that the central bank may consider further stimulus measures provided a shot in the arm to the markets.
The European Central Bank left its interest rates unchanged on Thursday as recent data suggest that economic recovery is continuing, albeit at a sluggish pace, while lower oil prices, stronger euro and the Chinese slowdown pose risks to the outlook.
The Governing Council, led by ECB President Mario Draghi, kept the refinancing rate at a record low 0.05 percent, following the meeting in Frankfurt. The decision was in line with economists' expectations.
The bank also left the deposit rate unchanged at -0.20 percent and the marginal lending rate at 0.30 percent. The three main interest rates were lowered by 10 basis points in September last year.
The European Central Bank lowered the economic growth and inflation outlook for the euro area on Thursday, citing more downside risks that have emerged recently, and said that it was ready to extend its quantitative easing programme beyond the September 2016 deadline, if needed.
'More recently, renewed downside risks have emerged to the outlook for growth and inflation,' ECB President Mario Draghi said in his customary post-decision press conference in Frankfurt.
'However, owing to sharp fluctuations in financial and commodity markets, the Governing Council judged it premature to conclude on whether these developments could have a lasting impact on the outlook for prices and on the achievement of a sustainable path of inflation towards our medium-term aim, or whether they should be considered to be mainly transitory.'
Draghi unveiled the latest ECB Staff macroeconomic projections that showed that the growth forecast for this year was lowered to 1.4 percent from 1.5 percent seen in June. The projection for next year was cut to 1.7 percent from 1.9 percent. The outlook for 2017 was cut to 1.8 percent from 2 percent.
Inflation forecast for this year was lowered to 0.1 percent from 0.3 percent. The projection for next year was cut to 1.1 percent from 1.5 percent. The outlook for 2017 was revised down to 1.7 percent from 1.8 percent. The downgrade was attributed mainly to lower oil prices.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 2.23 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 2.56 percent.
The DAX of Germany climbed by 2.68 percent and the CAC 40 of France rose by 2.17 percent. The FTSE of the U.K. gained 1.82 percent and the SMI of Switzerland finished higher by 1.73 percent.
In Frankfurt, Fresenius Medical Care surged by 4.20 percent and Fresenius added 3.04 percent.
Daimler increased by 3.70 percent and BMW gained 3.43 percent. Volkswagen also finished higher by 2.15 percent.
Deutsche Bank advanced by 3.79 percent and Commerzbank closed up by 2.65 percent.
In Paris, EDF fell by 2.24 percent. The utility said its new-generation EPR nuclear reactor under construction in northern France has been delayed again. The cost is now estimated to have more than tripled from the original estimate.
Car parts maker Valeo soared by 6.28 percent. Peugeot advanced by 4.36 percent and Renault rose by 3.37 percent.
Total increased by 3.44 percent and Technip added 2.23 percent.
In London, easyJet climbed by 5.38 percent after lifting its profit forecast for the year. Peer International Consolidated Airlines Group added 4.06 percent.
ARM Holdings rose by 3.09 percent after reporting a collaboration with IBM on Internet of Things.
Wm Morrison Supermarkets leaped by 4.72 percent on reports that Christo Wiese may be interested in buying the company.
Rio Tinto gained 3.29 percent. The company remains confident that the global demand for steel will continue to grow, despite the slowdown in China.
Glencore surged by 6.64 percent and Anglo American advanced by 6.03 percent. BHP Billiton climbed by 4.27 percent and Fresnillo added 3.93 percent.
Syngenta increased by 3.46 percent in Zurich. The crop chemicals major plans to divest its global vegetables seeds business.
Eurozone retail sales increased in July after falling a month ago, data from Eurostat showed Thursday. Retail sales advanced 0.4 percent in July from the prior month, reversing a revised 0.2 percent fall in June. This was the fastest growth in three months.
Economists had forecast sales to grow at a faster pace of 0.5 percent. The figure for June was revised from a 0.6 percent fall initially estimated.
Eurozone private sector growth improved more than estimated in August, final data from Markit showed Thursday. The final composite output index rose to 54.3 in August from 53.9 in July. The flash reading for August was 54.1. Output growth accelerated moderately in both the manufacturing and service sectors.
Germany's private sector growth accelerated more than initially estimated to a 5-month high in August, final data from Markit showed Thursday. The composite output index rose to 55 in August from 53.7 in July. The flash reading for August was 54.0. The index signaled the strongest increase in private sector output since March.
The French private sector growth slowed more than estimated to a 7-month low in August, final data from Markit showed Thursday. The final composite output index fell to 50.2 in August from 51.5 in July. It was well below the flash score of 51.3.
French unemployment rate held steady in the three months ended June, in line with expectations, figures from the statistical office Insee showed Thursday.
The jobless rate, measured according to International Labor Organisation, or ILO, standards, came in at 10.3 percent in the second quarter, the same rate as in the previous month. The figure was also matched with consensus estimate.
British services sector expanded at its weakest rate in over two years casting doubt about sustainability of economic growth into third quarter, a closely watched survey revealed Thursday. The services Purchasing Managers' Index dropped to 55.6, which was the weakest score since May 2013, survey results from Markit Economics and the Chartered Institute of Procurement & Supply showed.
That was in contrast to economists' expectation for a modest improvement in the reading to 57.7 from 57.4 in July. The growth slowed for second straight month.
A day ahead of tomorrow's monthly jobs report, the Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits rose more than expected in the week ended August 29th.
The report said initial jobless claims climbed to 282,000, an increase of 12,000 from the previous week's revised level of 270,000. Economists had expected jobless claims to edge up to 273,000 from the 271,000 originally reported for the previous week.
With the value of exports rising and the value of imports falling, the Commerce Department released a report on Thursday showing a notably narrower U.S. trade deficit in the month of July. The report said the trade deficit narrowed to $41.9 billion in July from a revised $45.2 billion in June. The deficit was the smallest since February.
Economists had expected the deficit to narrow to $42.0 billion from the $43.8 billion originally reported for the previous month.
After reporting a substantial acceleration in the pace of U.S. service sector growth in the previous month, the Institute for Supply Management released a report on Thursday showing a modest slowdown in the pace of growth in August.
The ISM said its non-manufacturing index edged down to 59.0 in August from 60.3 in July, although a reading above 50 indicates continued growth in the service sector. Economists had expected the index to dip to 58.5.
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