European stocks suffered a mid-session setback on Thursday, but strongly rebounded in late afternoon trades, riding on Bank of England's surprise rate cut and European Central Bank's announcement of an emergency bond purchase scheme.
Worries about the impact of the novel coronavirus pandemic shook the market earlier in the day, despite stocks finding some support at the start on bargain hunting.
The pan European Stoxx 600 surged up 2.91%. Among the major indices in Europe, the U.K.'s FTSE 100 ended up 1.4%, Germany's DAX gained 2% and France's CAC 40 rose 2.68%, while Switzerland's SMI ended stronger by 5.32%.
Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Italy, Netherlands, Norway, Poland, Russia, Spain and Sweden finished with sharp to moderate gains.
Portugal and Turkey closed weak.
The Bank of England cut the bank rate again, to a record low on Thursday, and expanded its bond buying scheme and the targeted funding measure for small and medium businesses, extending further support to the UK economy amid the spread of the coronavirus, or Covid-19.
In a special meeting, the Monetary Policy Committee voted unanimously to increase the Bank of England's holdings of UK government bonds and sterling non-financial investment-grade corporate bonds by GBP 200 billion to a total of GBP 645 billion, the bank said.
The bank reduced its lending rate by 15 basis points to 0.1%, cutting the rate for the second time this month. It also decided on Thursday to enlarge the Term Funding for SME scheme.
On Wednesday, the European Central Bank had announced the launch of a $820 billion emergency bond purchase scheme to soften the economic fallout from the virus pandemic.
In the German market, MTU Aero soared more than 15% and Muench.Rueckvers surged up 11%. Deutsche Post, Deutsche Bank, Deutsche Telekom, Lufthansa, Adidas, Vonovia and Infineon gained 5 to 8%.
Bayer, Allianz, Merck, Henkel, BASF and Covestro also rose sharply.
On the other hand, HeidelbergCement plunged more than 9%. Continental, Fresenius, BMW and E.ON also posted sharp losses.
In France, Unibail Rodamco shares vaulted more than 18%. Vinci and Airbus Group gained more than 9% each. STMicroElectronics, Bouygues, Hermes International, Kering, Thales, Air Liquide, Peugeot and Veolia Environment gained 4 to 8%.
Technip, Sodexo, Dassault Systemes, Societe Generale and Atos lost 2 to 4.5%.
In the U.K. market, shares of diversified financial services firm M&G Plc. rose as much as 34.4%.
Carnival and TUI both ended stronger by almost 19%. Auto Traders surged up 16% and Ashtead Group gained about 11.5%.
Meanwhile, IAG, Glencore, Evraz, Intercontinental Hotels and Segro lost 7 to 9%.
In economic news, Switzerland's central bank left its interest rates unchanged at -0.75% as expected, and raised its negative interest exemption threshold, as coronavirus, or Covid-19 is posing exceptionally large challenges to the economy.
The bank rephrased its view on the currency, saying the Swiss franc is "even more" highly valued.
Data from the Federal Customs Administration showed Switzerland's exports decreased by a real 3.3% month-on-month in February, after seeing an increase of 1.8% a month earlier. Imports fell 0.1% in February, following a 1.5% decline in the previous month.
The trade surplus decreased to CHF 2.018 billion in February from CHF 2.76 billion in the previous month.
According to the Federation of the Swiss Watch Industry, watch exports declined by 9.2% year-on-year in February.
Survey results from think tank ifo showed Germany's business confidence plunged to its lowest level since the global financial crisis as the spread of coronavirus took its toll on economic activity. The ifo also downgraded its GDP forecast sharply due to the coronavirus, or Covid-19, pandemic.
Elsewhere, the think tank DIW also predicted a recession for the Germany economy this year. The business confidence index fell to 87.7 in March from 96.0 in February. This was the biggest fall since 1991 and the weakest reading since August 2009.
According to a report from Eurostat, Eurozone construction output rose 3.6% in January after a 1.8% fall in December. The decline was driven by a 3.6% decrease in building construction and a 4.6% fall in civil engineering, the report showed.
On a year-on-year basis, the construction output rose 6% in January, after a 3.7% fall in the prior month.
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