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* Euro zone stock index .STOXXE trades at 2007 highs
* ECB signals faster money-printing to keep lid on yields
* Bank stocks tumble after ECB announcement
(Adds comment, updates prices throughout)
By Shreyashi Sanyal
March 11 (Reuters) - European stocks hit their highest level
in a year on Thursday as worries about a spike in inflation
eased and the European Central Bank said it was ready to
accelerate money-printing to keep a lid on euro zone borrowing
costs.
The pan-European STOXX 600 index .STOXX rose for a fourth
straight session, adding 0.5% to the previous day's gains
sparked by tame inflation data and the U.S. Congress approving
one of the largest economic stimulus measures in history. .N
A narrower index of euro zone blue chip stocks .STOXXE
gained 0.7% to trade at its highest level in more than 13 years.
The ECB said it would use its 1.85 trillion Pandemic
Emergency Purchase Programme (PEPP) more generously over the
coming months to stop any unwarranted rise in debt financing
costs. ECB President Christine Lagarde also warned against
premature policy tightening. "The market was concerned about rising yields which could
lead to quickly shrinking equity risk premia in the euro zone,"
said Florian Regnery, cross asset strategist at Commerzbank,
noting the favourable reaction to the ECB's commitment to
contain rising bond yields.
"It is a strong signal...we were not expecting them to be so
dovish. We thought they would merely stress the flexibility of
(the PEPP) but would not follow it up with concrete action just
yet."
The technology .SX8P , mining .SXPP and travel & leisure
.SXTP sectors were the top gainers in Europe, each rising more
than 2%. Banks .SX7P fell the most, with UK-based lender
HSBC's shares HSBA.L down 4.7%.
European stock markets are on course for strong weekly gains
on hopes that massive stimulus measures and vaccination
programmes will spur a recovery in the global economy, while
calmer bond markets boosted appetite for riskier assets like
equities.
France's state-controlled power group EDF EDF.PA jumped
10.9% after Finance Minister Bruno Le Maire told local TV that
there will be no break-up of the company as negotiations between
Paris and Brussels over an overhaul of the company enter a final
stage, sources told Reuters. Rolls-Royce RR.L edged up 0.7% as the British engine-maker
stuck to its forecast to burn through less cash this year after
posting a worse-than-expected 2020 loss. German fashion house Hugo Boss AG BOSSn.DE was down 3.6%
after saying it expects coronavirus restrictions to keep
weighing on its business in the first quarter, and German
chemicals maker Lanxess LXSG.DE fell 4.8% after a
disappointing 2021 earnings outlook.