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European stocks surge on ECB stimulus comments

The European Central Bank on Wednesday left the amount of emergency funds available to Greek banks unchanged at 80.2 billion euros amid signs of slowing depositor withdrawals, a Greek banking source said

Europe's main stock markets rallied Tuesday after an ECB executive board member signalled that the eurozone central bank would temporarily ramp up its stimulus programme.

In the eurozone, the benchmark CAC 40 index of top companies in Paris soared 2.09 percent to close at 5,117.30 points, while Frankfurt's DAX 30 surged 2.23 percent to 11,853.33 points compared with the close on Monday.

London's benchmark FTSE 100 index ended the day up 0.38 percent at 6,995.10 points, with gains tempered by news that British inflation fell into negative territory for the first time since 1960.

In foreign exchange, the euro sank to $1.1152 down from $1.1315 late in New York on Monday.

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"Equity markets are ecstatic over the news that the ECB will front-load its bond buying scheme, and the short-term boost to the QE scheme has driven stock markets around Europe higher," said analyst David Madden at trading firm IG.

ECB member Benoit Coeure, speaking at a conference in London on Monday, declared that the bank would purchase more assets than previously planned in May and June under its multi-billion-euro quantitative easing (QE) stimulus programme, owing to an expected market slowdown in the summer months.

"We are ... aware of seasonal patterns in fixed-income market activity with the traditional holiday period from mid-July to August characterised by notably lower market liquidity," he said.

He added that the ECB is "moderately front-loading its purchase activity in May and June, which will allow us to maintain our monthly average of 60 billion euros".

The ECB has stated that the QE stimulus, launched in March at a pace of 60 billion euros a month, would last at least through September 2016.

ECB chief Mario Draghi last week declared that the bank's massive stimulus for the eurozone will remain in force "as long as needed" to stabilise prices.

With the eurozone economy and inflation recently picking up, there has been speculation that the ECB would wind up early its unprecedented 1.1 trillion euro asset-purchase programme.

- 'Accelerate' Greek deal -

Coeure's speech eclipsed ongoing market concerns over the Greece's cash crisis.

Greece on Monday entered the final stretch of tortuous talks with the European Union and International Monetary Fund, with Athens calling for a breakthrough by the end of the month.

The Greek government and creditors have been stuck in a deadlock for four months over the reforms required to release a final 7.2 billion euros in bailout funds that are needed to service its debts and avoid default.

On Tuesday French President Francois Hollande and German Chancellor Angela Merkel stressed the need to speed up efforts to reach a Greek loan deal.

"We must accelerate it because the deadline is approaching," said Hollande as Greece's current bailout programme expires at the end of June.

Intensive talks on a loan deal with debt-strapped Greece are "making progress, I would say cautiously", Eurogroup chairman Jeroen Dijsselbloem said Tuesday.

But analysts warn that even if a deal is struck it would still not remove the possibility of a Greek euro exit.

"The current negotiations are only over Greece receiving the final payment of its existing bailout, so even if these negotiations are successful, this just kicks the can down the road," said Kevin Ferriter at research firm Capital Economics.

"And it seems likely that negotiations over a third bailout would be even more fractious... so a 'Grexit' remains a distinct possibility," he said.

Asian markets mostly rose Tuesday following a record close on Wall Street on Monday, but concerns about Greece's long-running debt-reform talks weighed on the euro.

Hong Kong gained 0.36 percent, Tokyo stocks climbed 0.68 percent, Seoul rose 0.34 percent and star performer Shanghai surged 3.13 percent. But Sydney finished 0.77 percent lower.

Wall Street stocks diverged Tuesday as strong US housing data was offset by disappointing Walmart earnings.

Around mid-day in New York, the Dow Jones Industrial Average was up a slight 0.07 percent at 18,311.43 points, while the S&P 500 was flat up 0.01 percent to 2,129.33. Both had closed at record highs on Monday.

The tech-rich Nasdaq Composite Index meanwhile slid 0.17 percent to 5,069.91.