European stocks extend gains ahead of ECB, Draghi; Dax up 1.2%

Investing.com - European stocks extended gains on Thursday, after data indicated that the slump in the euro zone’s manufacturing sector is easing.
 
Market players now looked ahead to the European Central Bank's upcoming policy statement due later in the day, as well as ECB President Mario Draghi's traditional press conference.

During European afternoon trade, the EURO STOXX 50 rose 0.8%, France’s CAC 40 added 0.5%, while Germany’s DAX 30 rallied 1.2%.

Data released earlier showed that July’s euro zone manufacturing purchasing managers’ index improved to a two-year high of 50.3 from 48.8 in June.

Germany’s manufacturing PMI was revised up to an 18-month high of 50.7 in July from a final reading of 48.6 in June and above the preliminary reading of 50.3.

Appetite for riskier assets was also boosted after the Federal Reserve on Wednesday gave no indications on whether it will begin to taper its stimulus program in the near future.

The U.S. central bank said that it would keep buying USD85 billion a month in mortgage and Treasury securities and added that the pace of economic growth is "modest".

Sentiment was also buoyed following the release of stronger-than-expected data on Chinese factory activity.

A government report released earlier in the session showed that China’s manufacturing purchasing managers' index rose unexpectedly to 50.3 in July from 50.1 in June.

A reading above 50.0 indicates industry expansion, below indicates contraction.

In earnings news, French lender Societe Generale saw shares rally almost 9% after saying second quarter profit more than doubled.

The upbeat results boosted other shares in the sector, with BNP Paribas rising 1.4%, Deutsche Bank climbing 1.1%, while Italian lender Unicredit tacked on 2.2%.

Meanwhile, German retailer Metro surged 7.5% after reporting second quarter earnings of EUR276 million, above expectations for EUR269.2 million.

On the downside, French drugmaker Sanofi saw shares drop 5.7% after the firm cut its 2013 profit estimate.    

Meanwhile, in London, FTSE 100 swung between modest gains and losses after the Bank of England announced no changes to monetary policy following its policy-setting meeting.

The BoE left interest rates on hold at a record low 0.5% and kept the size of its asset purchase program unchanged at GBP375 billion.

The decision came after Markit said the U.K. manufacturing purchasing managers' index rose to a 28-month high of 54.6 last month, from a reading of 52.9 in June.

Lloyds Banking Group saw shares rally 8.3% after reporting its first profitable six-month period in three years.

On the downside, oil producer Royal Dutch Shell fell 5% after posting a larger-than-expected drop in second quarter profit.

In the U.S., equity markets pointed to a higher open after the Fed gave no hint of plans to taper its USD85 billion-a-month in asset purchases.

The Dow Jones Industrial Average futures pointed to a gain of 0.7%, S&P 500 futures signaled a 0.7% increase, while the Nasdaq 100 futures indicated a 0.7% advance.

The U.S. was to publish official data on weekly unemployment claims, followed by a report by the Institute of Supply Management on manufacturing activity.

Market players also looked ahead to highly-anticipated data on U.S. nonfarm payrolls due on Friday for indications of how the recovery in the U.S. labor market is progressing.