European stocks turn sharply higher on Draghi remarks; DAX jumps 1.21%

Investing.com - European stocks turned sharply higher on Thursday, supported by remarks by European Central Bank President Mario Draghi and fresh expectations for further stimulus measures by the Federal Reserve.

During European afternoon trade, the EURO STOXX 50 surged 2.29%, France’s CAC 40 rallied 2.19%, while Germany’s DAX 30 jumped 1.21%.

Sentiment found mild support after ECB President Draghi said earlier that the bank will do whatever is necessary to preserve the euro.

Investor confidence had slightly weakened earlier, after Draghi dampened hopes that the euro zone’s bailout fund, the European Stability Mechanism, could be given a banking license, which would increase its firepower to fight the debt crisis in the euro zone.

Meanwhile, disappointing U.S. housing data on Wednesday sparked fresh expectations that the Fed may implement fresh easing measures to shore up growth.

Financial stocks extended earlier gains, led by Italian lenders Unicredit and Intesa Sanpaolo, up 6.93% and 6.62% respectively.

French lenders Societe Generale and BNP Paribas also pushed sharply higher, with shares rallying 5.64% and 4.97%, while Germany’s Deutsche Bank and Commerzbank climbed 3.29% and 2.28% respectively.

Among earnings, France Telecom surged 3.65% after the phone company reported a smaller-than- estimated decline in first-half revenue as price cuts helped slow customer defections.

On the downside, France’s largest phone-equipment supplier, Alcatel-Lucent, plummeted 8.23% after announcing job cuts as part of a plan to save an additional EUR750 million.

Spanish company Telefonica also dropped 0.43% after the company suspended its dividend and cut a revenue forecast, citing an “extremely challenging” economic environment.

In London, FTSE 100 jumped 0.95%, boosted by strong gains in mining and financial stocks.

Shares in copper producers Xstrata and Kazakhmys advanced 2.48% and 2.94% respectively, while mining giants Rio Tinto and BHP Billiton rallied 0.81% and 1.53%.

Meanwhile, U.K. lenders held gains, as shares in HSBC Holdings jumped 1.89% and the Royal Bank of Scotland advanced 1.89%, while Barclays and Lloyds Banking climbed 1.68% and 0.92%.

Lloyds Banking announced earlier an unexpected loss after setting aside additional money to compensate clients who were mis-sold loan insurance.

Oil and gas major Royal Dutch Shell remained lower on the other hand, with A shares tumbling 2.79% and B shares plunging 2.87%, after the company said that its second-quarter profit dropped from last year mainly due to lower energy prices.

In the U.S., equity markets pointed to a sharply higher open. The Dow Jones Industrial Average futures pointed to a 0.93% gain, S&P 500 futures signaled a 1.04% jump, while the Nasdaq 100 futures indicated a 1.01% increase.

Also Thursday, research group Gfk said that its index of Germany’s consumer climate rose to 5.9, from 5.8 in the preceding month. Analysts had expected Gfk consumer climate to remain unchanged at 5.8 last month.

Later in the day, the U.S. was to release official data on durable goods orders and unemployment claims, followed by a report on pending home sales.