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Stimulus hopes and higher oil prices buoy European markets

LONDON -- European stock markets pushed higher Wednesday, a day ahead of an expected stimulus package from the European Central Bank and as oil prices recouped some further ground.

In Europe, Germany's DAX was up 1.3 percent at 9,819 while the CAC-40 in France rose 1.1 percent to 4,452. Britain's FTSE 100 underperformed its peers, partly because Britain isn't part of the 19-country eurozone - it was up 0.7 percent at 6,167. Wall Street was poised for a solid opening, with Dow futures and the broader S&P 500 futures up 0.7 percent.

The ECB's policy meeting on Thursday is the major point of interest across financial markets this week. Expectations at a minimum are that the ECB's governing council will cut the deposit rate for funds from commercial banks further below zero, a step aimed at pushing banks to lend. And the ECB could increase its bond-buying program, which pumps newly printed money into the economy.

"European stocks have stormed back to life this morning, evidently in anticipation that the European Central Bank will ease its policy further as it attempts to boost growth and create inflation in an economy which is lacking on both fronts," said Fawad Razaqzada, technical analyst at

One of the motivations behind the stimulus - though central bankers rarely say so - is to get the euro down to help boost exports from the eurozone and to push up inflation both from more growth and higher import costs. Ahead of the expected stimulus, the euro was trading 0.3 percent lower at $1.0970.

Before the ECB makes its announcement, statements from the Bank of Canada and the Reserve Bank of New Zealand will also garner some interest. "Consensus looks for no change from either," said Societe Generale analyst Kit Juckes.

One major reason behind the recovery in stock markets over the past couple of weeks has been the rally in oil prices from multi-year lows. That recovery continued Wednesday. A barrel of benchmark New York crude was up 70 cents at $37.20 while the international standard, Brent, rose 72 cents to $40.37.

Japan's benchmark Nikkei 225 index lost 0.8 percent to close at 16,642.20 while South Korea's Kospi rose 0.3 percent to end at 1,952.95 after recovering early losses. Hong Kong's Hang Seng dipped 0.1 percent to 19,996.26 and the Shanghai Composite Index in mainland China retreated 1.3 percent to 2,862.56. Australia's S&P/ASX 200 gained 1 percent to 5,157.20, while markets in Southeast Asia were mixed.

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