European stocks closed higher yesterday, lifted by US housing data and Japan’s extra economic stimulus following similar moves from the US Federal Reserve and the European Central Bank.
London’s benchmark FTSE 100 index ended the day up 0.35 per cent at 5,888.48 points, while in Frankfurt, the Dax 30 was 0.59 per cent higher at 7,390.76 points, and in Paris, the CAC 40 gained 0.54 per cent to 3,531.82 points.
In foreign exchange deals, the euro gained to $1.3064 from $1.3044 in New York late on Tuesday.
Portugal continued to benefit from the European Central Bank’s announcement of a programme to buy bonds from distressed eurozone members, with the country successfully raising €2 billion at sharply lower interest rates in a short-term bond auction.
The debt-laden state under an EU-IMF bailout raised €1.291 billion for 18 months at 2.967 per cent compared with 4.537 per cent at the last such issue on April 4. It also raised €709 million for six months at 1.7 per cent, from 2.292 per cent on July 18.
Asian equities meanwhile fizzed higher after the Bank of Japan (BoJ) said it would boost a asset-buying scheme to kickstart the economy.
The BoJ announced after a two-day policy meeting it would boost an asset-purchasing fund by 10 trillion yen ($128 billion) to 80 trillion yen while also keeping interest rates between zero and 0.1 percent.
In the US, at around 1400 GMT, the Dow Jones Industrial Average was up 0.34 per cent, the S&P 500 index rose 0.29 per cent, while the tech-heavy Nasdaq inched up 0.08 per cent. New home construction in the US rebounded in August from a July decline as the distressed housing market slowly continues to stabilise, government data released on Wednesday showed.
Housing starts rose 2.3 per cent from July to an annual rate of 750,000, the Commerce Department said. But the August pace in housing starts was a bit weaker than expected, with the consensus estimate at 770,000.
“Housing remains one of the strongest sectors of the US economy and this slightly disappointing data doesn’t change the outlook,” said Dick Green at Briefing.com.
Markets in Asia were lifted by the Japanese stimulus programme.
“The Bank of Japan has decided to bring its own punchbowl to the global stimulus party, throwing ten trillion yen at the Japanese economy,” said analyst Chris Beauchamp at trading group IG Index.
“In part, this is designed to help weaken the yen, in order to defuse the pleas of Japanese exporters, but the sight of yet another central bank acting positively should help global markets.
“For now, however, the move has had little impact, with the FTSE fighting hard to stay in positive territory,” Beauchamp added.
Tokyo’s stock market rose to the highest level for more than four months following the BoJ announcement, gaining 1.19 per cent to 9,232.21 points – which was the highest closing level since May 2.