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Europe midday: Stocks find their footing amid speculation of big ECB in the works

Fri 16 August 2019 12:32 | A A A

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(Sharecast News) - Stocks on the Continent are rising amid speculation that the European Central Bank might be preparing large monetary stimulus package.

In an interview with the Wall Street Journal, ECB Governing Council member, Olli Rehn, said that it was preferable that the monetary authority exceed market expectations when it next eased policy than risk falling short.

On a related note, strategists at Bank of America-Merrill Lynch told clients that the recent yield curve inversion was the result of the global recession in manufacturing, labelling it a "cry for help".

"GDP recessions normally follow with a lag but swift policy action can avert recession; key now is bold policy to steepen yield curve (e.g. Fed cuts 50bps, PBoC cuts 100bps, Trump announces trade war truce)," they said.

Their recommendation to investors was to buy in the first week of September.

Regarding the ongoing US-China trade tensions, overnight the US President said he had a telephone with his Chinese counterpart, Xi Jinping, scheduled soon.

He also said that he could respond to any new counter-tariffs from Beijing, Bloomberg reported.

As of 1230 BST, the benchmark Stoxx 600 was rising by 1.11% to 369.14, alongside a rise of 0.96% to 11,522.13 for the German Dax and a gain of 1.08% to 20,236.36 for the FTSE Mibtel.

There was little on the economic front for investors to digest aside from a reading on euro area foreign trade.

According to Eurostat, the Eurozone's trade surplus narrowed from €19.6bn for May to €17.9bn in June (consensus: €18.5bn) as exports declined at a 0.6% month-on-month pace.

On another front, the Wall Street Journal reported at the end of the week on the US President's interest in purchasing Greenland, prompting a former Danish Prime Minister to wonder aloud whether it was not "an April Fool's joke ... but totally out of sesson!".

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