European stocks edged up Thursday, with bank shares gaining ground before the European Central Bank unveils its latest monetary policy decision.
The Stoxx Europe 600 SXXP, +0.18% rose 0.3% to 351.46. The pan-European index on Wednesday closed the session with a 0.3% gain.
The ECB’s policy announcement later will be a focus of attention. Investors have become increasingly convinced the ECB will extend its asset-buying program beyond March 2017, but there’s still question as to whether such a move will be made Thursday.
Recent purchasing managers indexes have shown private-sector activity in the eurozone expanded in August, but with weakness in the sector has emerged in Germany and peripheral countries.
“Our European rates team looks for the deposit floor to be dropped today, which would mean a rally in short-dated cash products and a knee-jerk euro negative reaction,” said Elsa Lignos, senior currency strategists at RBC Capital Markets, in a note.
The euro EURUSD, +0.2491% was trading at $1.1264, compared with $1.1244 late Wednesday.
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RBC’s economists will “look for the 2017 growth estimate to be lowered as the U.K. referendum is factored in, and that should have a knock on-effect on inflation,” Lignos said. “So while consensus might not be looking for an extension to QE today, that may understate the expectations for today’s press conference.”
The central bank announcement is scheduled for 12:45 p.m. London time, or 7:45 a.m. Eastern Time. A press conference with ECB President Mario Draghi is slated to begin at 1:30 p.m. London time.
Bank rises: Shares of Germany’s Deutsche Bank AG DBK, +0.65% DB, +0.55% was up 1%, while France’s BNP Paribas SA BNP, +0.73% gained 0.8% and Spain’s Banco Santander SA SAN, +1.11% SAN, +0.88% rose 1.3%.
Italy’s Banca Monte dei Paschi di Siena SpA BMPS, +2.92% was up 4.1% after a ratings update to equalweight from underweight at Morgan Stanley.
The Stoxx 600 Bank Index FX7, +0.43% gained 0.6%.
The U.K’s FTSE 100 UKX, +0.57% gained 0.5% to 6,879.48.
Movers: Micro Focus International PLC MCRO, +20.36% shares jumped 21%, topping the Stoxx 600, after Hewlett Packard Enterprise Co. said it will spin off and merge its software operations with those of the British company in an $8.8 billion deal.