22nd Jan 2015 06:59
LONDON (Alliance News) - London markets are set to trade higher Thursday, buoyed by the expectation of a long-anticipated move by the European Central Bank to add sovereign bond buying to its arsenal of stimulus measures.
The FTSE 100 is called to open 13 points higher at 6,6,741.1, building on five sessions of gains after London shares outperformed their European and US peers Wednesday, with the FTSE 100 closing up 1.6%. The Bank of England minutes showed a surprise unanimous decision to keep UK interest rates on hold, prompting analysts to push back their expectations for the first rate hike since the onset of recession.
No change is expected for the ECB's 0.05% interest rate at 1245 GMT but President Mario Draghi is widely expected to say in his press conference at 1330 GMT that the bank will start buying sovereign debt in a bid to boost the moribund European economy. After clearing a legal hurdle last week, moves by the Swiss and Danish central banks in the past week have also been interpreted as signs the ECB will broaden its policy measures.
Reports suggest that the European Central Bank's executive board has proposed bond purchases of about EUR50 billion a month lasting for at least a year.
The ECB's executive board met on Tuesday to decide on the proposal, which will form the basis of deliberations by the entire 25-member governing council when it meets on Thursday, The Wall Street Journal reported. The final figure and the details of the plan could change after the full council weighs in, it said.
Bloomberg cited two eurozone central bank officials who have seen the document saying that the proposal foresees asset purchases of EUR50 billion a month through the end of 2016.
The WSJ said an ECB spokesman declined to comment.
Still, ECB governing council member and Austrian central bank chief Ewald Nowotny attempted to play down the growing anticipation among investors and instead advised a longer term outlook.
"Central bankers, bankers, policy makers should always have more of a relaxed attitude to news and (not) get too excited to news of one day," he told a Euromoney conference in Vienna on Wednesday.
News from the ECB will likely overshadow weekly jobless claims in the US at 1330 GMT and euro area preliminary consumer confidence at 1500 GMT.
In Asia, Japan's Nikkei closed up 0.3% at 17,329.02. The Hang Seng in Hong Kong is up 0.9% at 24,565.33, and the Shanghai Composite is 0.4% higher at 3,338.805.
Brent crude is quoted at around USD48.91a barrel Thursday, up from last week's low of USD45.16, and US benchmark West Texas Intermediate is quoted at USD47.50 a barrel. Gold is hovering below the psychologically important USD1,300 level passed Wednesday for the first time since last summer. Early Thursday it is quoted at USD1,285.77 an ounce.
In UK corporate news, Royal Mail and Countrywide are set to give trading updates and St James's Place reports on its fourth-quarter performance.
US earnings include Starbucks, Verizon Communications and Union Pacific.
By Ian Edmondson; [email protected]
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