Expectations of monetary stimulus from the European Central Bank (ECB), coupled with a rise in HSBC, drove European shares to a five-year high yesterday.

The pan-European FTSEurofirst 300 index closed up by 0.3 per cent at 1,293.63 points, its highest closing level since mid-2008. The index had also earlier hit a five-year intraday high of 1,297.01 points.

The euro zone’s blue-chip Euro STOXX 50 index also advanced 0.3 per cent, to 3,061.18 points, while Germany’s DAX – which hit a record high of 9,070.17 points last week – also rose 0.3 per cent to 9,037.23 points. UK bank HSBC rose 2.3 per cent to add the most points to the FTSEurofirst 300 after posting a 10 per cent rise in third quarter profits and issuing a positive outlook.

European equities were also supported by expectations that the ECB will take on an accommodative tone towards helping the region’s economy at its policy meeting on Thursday, after a drop in eurozone inflation in October.

UBS and Royal Bank of Scotland are anticipating an interest rate cut although many others expect the ECB to hold fire on concrete action until at least December.

“An accommodative stance by the ECB is by now not only expected by investors but also demanded politically. So, for a while, the risk is for a break to the upside on equities,” said SteppenWolf Capital chief investment officer Phoebus Theologites.