Investing.com - European stocks surged higher Thursday, as strong U.S. economic numbers combined with the European Central Bank’s bond buying program to launch the risk on equity trade.
At the close of European trade, the EURO STOXX 50 climbed 3.40%, France’s CAC 40 advanced 3.06%, while Germany’s DAX 30 jumped 2.91%.
Igniting the bullish stock environment, ECB President Draghi outlined a new bond purchasing program, dubbed Outright Monetary Transactions, which he said will provide "a fully effective backstop" against market volatility.
Draghi continued to say, “strict and effective conditionality” was an essential element of the plan, under which the ECB would unlimited amounts of government bonds of up to three years in maturity, as long as the country in question is signed up to the OMT program and agrees to economic reforms.
The ECB also slashed its forecast for economic growth for this year, to a contraction of 0.6%, from a previous forecast for a 0.2% contraction.
The bank maintained the benchmark interest rate at a record-low 0.75% at its policy meeting earlier in the day, in line with expectations.
Bullish news continued from the U.S. when a report by payroll processing firm ADP indicated non-farm payrolls rose by 201,000 in August, beating expectations for a 140,000 increase, after a rise of 173,000 the previous month.
Meanwhile, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits last week fell to 365,000 from 377,000, against expectations for a decline to 370,000.
The previous week’s figure was revised up to 377,000 from a previously reported 374,000.
Financial stocks remained broadly higher, as shares in Germany’s Deutsche Bank surged 2.05% and Commerzbank rallied 1.05%, while French lenders BNP Paribas and Societe Generale advanced 1.22% and 1.36% respectively.
Peripheral lenders also posted strong gains, as Italy’s Unicredit soared 2.41% and Intesa Sanpaolo climbed 0.71%, while Spanish lenders Banco Santander and BBVA gained 0.91% and 0.35% respectively.
In London, commodity-heavy FTSE 100 advanced 2.11%, boosted by gains in mining and oil stocks, while the Bank of England left the benchmark interest rate and asset purchase facility unchanged.
Mining giant Rio Tinto remained one of the session’s top gainers, with shares rallying 2.21%, closely followed by BHP Billiton, up 1.46%, while copper producers Xstrata and Kazakhmys advanced 1.11% and 1.84% respectively.
Lonmin, the platinum producer whose main mine has been shut since August 10 because of a violent strike, saw shares soar 5.76% after the company signed an agreement with three labor unions to reopen wage talks.
Also on the upside, oil and gas major Anglo American jumped 1.91%, extending earlier gains, while BP dipped 0.03%.
Elsewhere, Dixons Retail advanced 1.78% after saying that first quarter like-for-like sales rose 5%, beating estimates.
The U.K.’s largest consumer electronics retailer added that same-store sales in the U.K. and Ireland, which account for almost half of the group’s business, climbed 7%.
In the financial sector, stocks turned broadly higher. Shares in Barclays jumped 1.07% and Lloyds Banking climbed 0.97%, while the Royal Bank of Scotland and HSBC Holdings rallied 0.88% and 0.64% respectively.
Stocks followed higher in the U.S. with the Dow Jones up 1.78%, the S&P 500 higher by 1.92% and the tech heavy Nasdaq soaring 2.03%
Traders are anticipating the U.S. nonfarm payrolls and unemployment rate on Friday.