European stocks rebound before ECB rate call

European equities rebounded Wednesday as weak Chinese economic growth data stoked Beijing stimulus hopes, while traders geared up for the latest eurozone interest rate call and eyed rising oil prices.

Sentiment was also boosted after Finnish telecoms giant Nokia agreed a 15.6-billion-euro ($16.5-billion) takeover of Franco-American rival Alcatel-Lucent.

The deal, creating the world's biggest supplier of mobile phone network equipment, sent Alcatel shares slumping more than 12 percent in Paris -- but Nokia won 1.8 percent in Helsinki.

The merger of two companies -- once high-flying new technology stars -- is aimed at producing a European champion able to take on Nokia's Swedish rival Ericsson and fierce Chinese competition.

In late Paris morning deals, the benchmark CAC 40 index rallied 0.64 percent to 5,251.26 points and Frankfurt's DAX 30 won 0.47 percent to 12,285.26 compared with Tuesday's close.

London's FTSE 100 index advanced 0.32 percent to 7,099.11 points, aided partly by news of sparkling sales from luxury goods company Burberry.

Dealers remained on tenterhooks before the outcome of the latest monetary policy meeting of the European Central Bank (ECB) at 1145 GMT.

"Wednesday has brought with it a wave of positive trading in Europe," said Spreadex analyst Connor Campbell.

"It is likely that the latest push by Brent crude, the increasing chances of more stimulus in China, the latest M&A news from Nokia and Alcatel-Lucent, and the hope that Mario Draghi will be bullish on ECB QE's continued implementation this afternoon, has overridden the negative UK election/Greek debt saga-inspired trading environment that defined the start of the week."

In foreign exchange activity, the European single currency retreated to $1.0584 from $1.0654 late in New York on Tuesday.

- ECB eagerly awaited -

ECB chief Mario Draghi is not expected to announce any changes in policy at the governing council's regular meeting.

But he is likely to underline the positive effects of a raft of different policy measures, including a contested sovereign bond purchase programme -- known as quantitative easing (QE) -- launched last month.

And he will be at pains to emphasise that there are no plans to "taper" the measures any time soon, analysts said.

"Today?s major event is the ECB meeting and press conference," added FxPro analyst Angus Campbell.

"Here investors will be keen to hear what Mario Draghi has to say about the QE programme and the ECB?s thoughts on the ongoing Greece negotiations. Greek banks continue to rely heavily on the ECB for their funding."

Markets were also lifted by rebounding world oil prices, with Brent crude above $59 per barrel on hopes of an easing global supply glut.

"Oil related stocks are very sensitive to the price of oil as it directly impacts their profitability," Oanda analyst Craig Erlam told AFP.

"Just as we saw when oil prices were tumbling, the heavy weighting of these large stocks in the indices will often play a big role in their direction on the day."

- China stimulus hopes? -

Across in Asia, Hong Kong stocks ticked higher but Shanghai sank after a further slowdown in Chinese economic growth, while Tokyo dipped on a stronger yen.

Shanghai tumbled 1.24 percent but Hong Kong closed up 0.21 percent.

China said its economy expanded 7.0 percent in the first three months of 2015, slightly better than forecast in an AFP survey but much slower than October-December. It was also the worst for a single quarter since the first three months of 2009, in the depths of the global financial crisis.

The figures are the latest to highlight a slowdown in the economy and will likely increase expectations Beijing will announce more stimulus on top of two interest rate rises since November.

The economy grew last year at its slowest pace in almost a quarter of a century, buffeted by weak manufacturing, slow domestic demand and low government investment, among other factors.

Disappointing US retail sales data has meanwhile dampened hopes of an early interest rate cut from the Federal Reserve.