London - European shares rose back to near multi-year highs on Tuesday after a European Central Bank (ECB) policymaker said the ECB would front-load an asset purchase scheme, aimed at boosting growth in the region.
Athens' stock market, which has consistently underperformed this year due to worries over Greece's debt situation, also rose after the Greek labour minister said Athens would soon conclude a deal with foreign creditors that could unlock more loans to the cash-starved country.
Benoit Coeure, an executive board member at the ECB, said the ECB would front-load asset purchases in May and June due to low market liquidity in July and August.
Coeure added that a recent European government bond market selloff was a normal correction but the rapidity of the adjustment was worrisome and indicated “extreme volatility” in the market.
European shares wobbled last week in the wake of the European government bond sell-off, but the region's stock markets have remained propped up by the ECB's economic stimulus programme.
Record low interest rates and government bond purchases by the ECB have weighed on the euro currency, depressed returns on bonds and cash and pushed many investors over to the better returns on offer from equities.
Coeure's comments pushed down the euro and lifted European stocks.
The pan-European FTSEurofirst 300 index rose 1.5 percent to 1,604.03 points, near its 2015 peak of 1,653.85 points which marked its best level in more than 14 years.
Germany's DAX also rose 1.7 percent to 11,793.45 points, leaving it 5 percent below a record high set in April.
“I still think that bonds are risky and that equities remain the asset of choice,” said Francois Savary, chief strategist at Swiss bank Reyl.
Among individual stocks, media group Reed Elsevier rose by 2.2 percent after Goldman Sachs raised its rating on the stock to “buy” from “neutral”.
However, Vodafone fell 2.8 percent as some traders said the mobile network operator's guidance had been slightly below forecasts, even though Vodafone returned to quarterly sales growth.
According to data from Thomson Reuters StarMine, 61 percent of the companies on the pan-European STOXX 600 index have beaten or met market expectations with their first quarter results, while 39 percent have missed expectations.
The FTSEurofirst 300 is up 17 percent since the start of 2015 while the DAX is up 20 percent.
Reuters