Europe close: Investors pin hopes on ECB, China

European stocks finished the day largely up as the market looked ahead to hopes of more stimulus from the European Central Bank, while mulling on the meaning of China's cut to its bank reserve ratio.

The markets started the day in the red, as disappointment over the outcome of the G20 meeting in Shanghai late last week lingered. Traders were not pleased that the meeting ended without a coordinated effort to stimulate global growth.

But by the close, the benchmark Stoxx Europe 600 index was up 0.5%, Germany’s DAX was 0.52% lower and France’s CAC was up 0.51%.

During the day oil prices were also on the up, with Brent crude up 2.61% at $36.04 a barrel and West Texas Intermediate gaining 2.3% to $33.57.

Prices were boosted by reports that OPEC's output of crude declined by 270,000 barrels per day in February to 32,265 million barrels per day, according to a Bloomberg story citing JBC Energy.

European indices pared losses earlier in the day after the People's Bank of China cut its reserve requirement ratio by 50 basis points from 1 March, in a move to pump liquidity into its slowing economy.

The central bank has now made five RRR cuts since November 2014, which frees up capital by lowering the amount of back-up funds banks must hold centrally.

Investors also reacted to news that Eurozone inflation turned negative in February, raising expectations that the European Central Bank would implement further stimulus measures at its meeting on 10 March.

According to figures released by Eurostat, consumer prices fell 0.2% in the year to February, down from 0.3% in January. Economists had been expecting it to drop to zero.

The core rate of inflation, which strips energy, food, alcohol and tobacco, dropped to 0.7% from 1%. The ECB is targeting inflation of just below 2%.

In corporate news, Barclays was up 1.8% after saying it was evaluating strategic options for its African business following reports at the weekend that the bank was moving closer to an exit.

Standard Chartered gained 0.36% after Bernstein cut the price target on its Hong Kong listed stock, while HSBC slumped 1.44% after the same analysts trimmed their price target.

Roche Holding was 1.09% in the black after the pharmaceutical group said studies for one of its asthma drugs did not come to conclusive results.

Supermarket Morrisons rallied 5.64% after announcing that it has inked a supply agreement with Amazon.com that will mean hundreds of its products will be available to Amazon Prime Now and Amazon Pantry customers in the coming months.

AstraZeneca lost 2.6% after saying it has entered a licensing deal with China Medical System Holdings for the commercialisation rights in China to its hypertension medicine Plendil.