European Stocks Gain as ECB Leaves Key Interest Rates Unchanged

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European markets rose on Wednesday after the European Central Bank (ECB) announced that the key interest rate would remain unchanged and affirmed the bank's aim of continuing with its bond-buying programme, which commenced last month.

During a press conference which was briefly interrupted by a protester who threw pieces of paper at ECB President Mario Draghi, it was announced that the interest rate on the main refinancing operations, the interest rates on the marginal lending facility, and the deposit facility would remain unchanged at 0.05%, 0.30% and -0.20%, respectively.

Regarding the bond-buying programme, Mr Draghi said that "purchases are intended to run until the end of September 2016 and, in any case, until we see a sustained adjustment in the path of inflation that is consistent with our aim of achieving inflation rates below, but close to, 2% over the medium term."

He added that the implementation of the asset purchase programmes had been proceeding smoothly, with volumes in line with the announced figure of EUR60 billion of securities per month.

"There is clear evidence that the monetary policy measures we have put in place are effective. Financial market conditions and the cost of external finance for the private sector have eased considerably over the past months and borrowing conditions for firms and households have improved notably, with a pick-up in the demand for credit," Draghi said.

According to Eurostat's flash estimate, euro area annual HICP inflation was down 0.1% in March 2015, up from a 0.3% contraction in February and a 0.6% decline in January. The ECB said that this pattern largely reflected an increase in oil prices in euro terms since mid-January.

Further afield, China's National Bureau of Statistics published data showing that according to the preliminary estimation, the gross domestic product ( GDP ) of China in the first quarter of this year was 14,066.7 billion yuan, a year-on-year increase of 7.0%. This marks an increase of 1.3% against the previous quarter.

In company news, mining stocks gained for a second day running with Rio Tinto closed higher 1.1% in London while BHP Billiton added 1.0%. Eni SpA closed higher 1.8% in Italy while BP added 1.1% in London.

Alcatel-Lucent, a provider of voice, data, and video services, fell nearly 16% in Paris while Nokia shed 1.5% in Helsinki. This came the same day that the companies announced their intention to combine.

"The two companies have entered into a memorandum of understanding under which Nokia will make an offer for all of the equity securities issued by Alcatel-Lucent, through a public exchange offer in France and in the United States, on the basis of 0.55 of a new Nokia share for every Alcatel-Lucent share," an announcement published on Alcatel-Lucent's website stated.

The all-share transaction values Alcatel-Lucent at EUR 15.6 billion ($16.5 billion) on a fully diluted basis, corresponding to a fully diluted premium of 34% (equivalent to EUR 4.48 per share), and a premium to shareholders of 28% (equivalent to EUR 4.27 per share), on the unaffected weighted average share price of Alcatel-Lucent for the previous three months. This is based on Nokia's unaffected closing share price of EUR 7.77 on April 13, 2015.

The FTSE 100 closed higher 0.30%, the DAX closed practically unchanged and the CAC-40 ended up 0.70%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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