European stock markets surge on renewed ECB hopes

Europe's stock markets posted strong gains across the board Friday, shrugging off early doubts which had led to volatility on the back of the latest European Central Bank stimulus measures unveiled Thursday.

Frankfurt's DAX 30 index and the Paris CAC 40 index both ended the day up more than 3.0 percent, Frankfurt rising 3.5 percent to 9,831.13 points at the close. Paris added 3.3 percent to finish at 4,492.79 points.

Italy did even better as Milan put on 4.8 percent and Madrid ended 3.7 percent up.

Outside the eurozone, London's benchmark FTSE 100 index gained 1.7 percent compared with Thursday's close, with financial and commodity stocks leading the way as the index closed at 6,139.79 points.

Wall Street followed the trend, the Dow Jones Industrial Average adding 1.2 percent two hours after the opening while the broad-market S&P 500 and the tech-rich Nasdaq Composite also rose by a similar margin.

The euro was virtually unchanged against the dollar at $1.1184 from $1.1183 Thursday.

European markets had finished decisively lower Thursday as initial enthusiasm about ECB stimulus was replaced with doubts about the central bank's plans and the region's outlook.

But Friday saw a spectacular about-turn after what many observers saw as bolder-than-expected ECB action.

Those measures "reflected concerns ... that the central bank is running out of policy ammunition. (But) those concerns seem a bit overdone to us and we wouldn't be surprised to see at least some of the market response reversed in the coming days and weeks," Capital Economics said.

"Nonetheless, monetary policy alone cannot address all of the currency union's problems," the research company warned.

Equities had initially surged Thursday after the ECB cut its main interest rate to zero percent for the first time, and boosted the amount of cash stimulus it is pumping around the eurozone economy.

But bourses then slumped back after the central bank cut its growth and inflation forecasts for 2016 and 2017, while ECB chief Mario Draghi said he did not anticipate further interest rate cuts.

In volatile trading that has become the hallmark of recent unrest across all financial markets, European stocks bounced back once more heading into the weekend break.

FXTM research analyst Lukman Otunuga wrote in a note to clients that "stock markets are still vulnerable and may be poised for further decline in the future as the ECB fiasco compounds to the ongoing global woes".

- Asia ends on high -

Asian markets earlier ended the week on a high, an afternoon rally erasing morning losses and those of the previous session as investors changed tack on an initial dim view of the ECB package.

Regional markets sank into the red soon after opening as Draghi's statement was seen an indication of the limitations on finance chiefs to drag the global economy out of its long-running torpor.

Observers said central banks around the world are gradually running out of weapons to kick-start their respective economies after a series of measures.

Attention will now turn to next week's policy meetings for the Federal Reserve, with hopes for some forward guidance on US interest rate policy, as well as for the Bank of Japan and Bank of England.

- Key figures around 1500 GMT -

London - FTSE 100: UP 1.7 percent at 6,139.79 (close)

Frankfurt - DAX 30: UP 3.5 percent at 9,831.13 (close)

Paris - CAC 40: UP 3.3 percent at 4,492.79 (close)

EURO STOXX 50: UP 3.5 percent at 3,073.80

Tokyo - Nikkei 225: UP 0.5 percent at 16,938.87 (close)

Shanghai - composite: UP 0.2 percent at 2,810.31 (close)

Hong Kong - Hang Seng: UP 1.1 percent at 20,199.60 (close)

New York - Dow: UP 1.2 percent at 17,202.22

Euro/dollar: UP at $1.1184 from $1.1183 on Thursday

Dollar/yen: UP at 113.82 yen from 113.17 yen