LONDON--European equities rebounded sharply Thursday on eurozone stimulus hopes, bright US data and a modest recovery in oil prices, dealers said.
However, the euro nosedived under $1.18 to reach the lowest level in more than nine years, hit by mounting speculation that the European Central Bank could launch quantitative easing to counter deflation.
London's benchmark FTSE 100 index rallied 1.57 percent to 6,520.45 points in afternoon trading, as investors shrugged off news that the Bank of England held British interest rates again at a record-low level of 0.50 percent.
Frankfurt's DAX 30 won 1.74 percent to 9,683.65 points and the CAC 40 in Paris soared 2.57 percent to 4,218.38.
"European stocks rallied ... on expectations of more aggressive stimulus measures in the eurozone, with major bourses in the black," said Atif Latif, director of trading at Guardian Stockbrokers.
In foreign exchange activity, the European single currency plunged to $1.1754 -- the lowest level since the beginning of December 2005. It later stood at $1.1775.
"Optimism over more ECB stimulus may have helped equities but the prospect of further central bank easing was detrimental for the euro, which slid to a new nine-year low," said ETX Capital analyst Daniel Sugarman.
- Tesco surges -
Back in London, Britain's biggest retailer Tesco topped the risers board as the supermarket chain unveiled a new restructuring aimed at reviving its fortunes.
The group, which did not outline potential job losses, will overhaul central overheads to deliver £250 million ($377 million, 319 million euros) of savings per year.
Tesco shares spiked 12.5 percent to 204.71 pence, but it also revealed sliding sales in the key Christmas trading period.
"Tesco is leading the FTSE 100 leaderboard after announcing a series of cost-cutting measures to turn the troubled retailer around," noted IG analyst David Madden.
On the downside, clothing-to-food retailer Marks and Spencer topped the fallers board, sinking 3.8 percent to 445.6 pence.
M&S sales slid 1.6 percent in the 13 weeks to December 27, as clothing was hit by unseasonably warm autumn weather in the third quarter.
European equities had bounded higher Wednesday as weak eurozone inflation data sparked speculation the European Central Bank (ECB) will undertake additional stimulus measures.
Investor sentiment was bolstered by data showing consumer prices in the eurozone fell in December for the first time since October 2009, at the height of the financial crisis.
The news, raising fears the bloc is about to slip into a deflationary spiral, fuelled expectations the ECB will embark on a vast bond-buying programme known as quantitative easing (QE).
And in a rare glimmer of good news, data released Thursday showed eurozone retail sales rose by 0.6 percent in November compared with October.
- Asia, US stocks up -
Asian equity markets mostly rallied Thursday on strong US data and ECB stimulus hopes, while oil prices staged a slight rebound following recent sustained heavy losses.
Confidence was given a much-needed boost by minutes from the US Federal Reserve's December meeting suggesting the world's most powerful central bank will not hike interest rates before April.
Tokyo surged 1.67 percent as the yen gave up recent gains against the dollar, while Hong Kong rose 0.65 percent, Sydney climbed 0.52 percent and Seoul advanced 1.11 percent.
However, Shanghai tumbled 2.39 percent on profit-taking.
This week's advances come as welcome relief for global markets, which have been hammered by a slump in oil prices and growing fears that Greece could exit the eurozone as an anti-austerity party is leading in the opinion polls ahead of the January 25 election.
AFP
