European stocks enjoy Chinese holiday

European stocks shot higher today as investors enjoyed a respite from volatile Chinese markets being closed for a long holiday weekend and took cheer from hints of more central bank stimulus.
London's FTSE 100 index of leading shares climbed 1.45 per cent to stand at 6,171.44 points, Paris's CAC 40 index jumped 1.8 per cent to 4,637.21 and in Frankfurt the DAX 30 soared 2.27 per cent to 10,276.17.
A rally on Wall Street yesterday on upbeat US data also helped improve sentiment in European trading, as did calm on Asian markets.
"At least for a few days, concerns over China can be put to one side while the country closes its exchanges to celebrate seventy years since the end of World War II," said CMC Markets UK analyst Jasper Lawler.

Meanwhile the European Central Bank, as expected, kept its main rate at a record low 0.05 per cent today. However, analysts were looking more for signals that it could step up stimulus if necessary.
Beyond causing panic in stock markets in recent weeks, slower growth in China -- the world's number two economy -- has led to drops in commodity prices and a rebound in the euro that are complicating the ECB's efforts to combat deflation and restore growth.

The ECB acknowledged inflation could turn negative again temporarily, and the bank cut its forecasts for inflation and growth.
ECB chief Mario Draghi said the bank could step up or extend its stimulus programme that is buying 60 billion euros of sovereign and corporate bonds per month.

"The asset purchase programme provides sufficient flexibility in terms of adjusting the size, composition and duration", said Draghi at a news conference.
It was "intended to run until the end of September 2016, or beyond, if necessary," he added.
The euro, which had been holding around USD 1.1220, fell more than a cent to below USD 1.1120 immediately after Draghi's comments.
European stock markets also shot up further after Draghi spoke.
"Following the wild sell-off in the equity complex, the central banks are naturally expected to remain fully supportive of the financial markets," said Ipek Ozkardeskaya at London Capital Group, who put an increase in US interest rates to December at the earliest.

In corporate action, shares in low-cost airline EasyJet soared 5.0 per cent to 1,756 pence after it raised its full year pre-tax profit forecast to a record 675-700 million pounds (USD 1.03-1.07 billion).