European stocks climb following ECB meeting

European stocks climbed as the European Central Bank delayed its withdrawal of emergency liquidity measures and bought more government…

European stocks climbed as the European Central Bank delayed its withdrawal of emergency liquidity measures and bought more government bonds to stem the region's debt crisis.

The Irish index of shares gained 43.83 points to 2,738.45 at 3.27pm, with building and food groups gaining and financial stocks rising slightly through the day.

By 3.20pm, Irish Life and Permenant was up 0.78 per cent to €1.04, while Bank of Ireland gained 0.94 per cent to trade at 32 cent. AIB rose 2.35 per cent to 35 cent.

The Stoxx 600 gained 1 per cent to 269.82 as of 3.21pm in London. The gauge jumped 2 per cent yesterday, the most since September 1st, amid speculation ECB policy makers may step up measures to contain the government-debt crisis and after a report showed China's manufacturing activity grew at the fastest pace in seven months in November.

"People were eagerly motivated that there would be some sort of rescue plan, but even if they print as much money as they want, they need to pay for it later," said Alberto Espelosin, who helps manage about $12 billion at Zaragoza, Spain-based Ibercaja Gestion. "What's needed in Europe is serious structural reforms within states if you want risk premiums to come down."

The ECB will offer banks unlimited loans through the first quarter over periods of seven days, one month and three months, president Jean-Claude Trichet told reporters at a press conference in Frankfurt. Irish and Portuguese bonds surged as ECB officials embarked on a new round of debt purchases, according to traders with knowledge of the transactions.

The Irish 10-year Government bond yield fell to 8.52 per cent, down 0.42 per cent from its opening level today.

Trends in European stocks during 2010 are likely to repeat themselves next year, and investors should favor shares in countries like Germany and bet against nations in the "periphery," Goldman Sachs Group strategists led by Peter Oppenheimer wrote in a report.

Investors should also pick stocks with sales in the largest emerging economies, which will outpace growth in the euro zone, and businesses with "high operating leverage" amid "strong global economic growth", the report said.