Europe close: Strong gains for stocks

European stocks racked up very solid gains on Friday as investors continued to take heart from signs the European Central Bank may implement further stimulus measures, with energy issues in the lead as oil prices rallied.

The benchmark DJ Stoxx Europe 600 index ran up 3.0%, France’s CAC was 3.1% higher and Germany’s DAX by another 1.99%.

A wave of buying swept through Asian markets overnight, with Japan’s Nikkei 225 closing up nearly 5.9%, China’s Shanghai Composite 1.3% higher and Hong Kong’s Hang Seng up 2.9%.

To take note of, the Financial Times reported on rumours in markets that sovereign wealth funds had been active sellers of Japanese stocks - in particular - recently.

Nonetheless, the positive tone was attributed to Draghi’s dovish words on Thursday and comments from Japanese Prime Minister Shinzo Abe’s aide, who said "conditions for additional easing have fallen into place.”

Speaking from the World Economic Forum in Davos, Switzerland Bank of England chief Mark Carney sounded a confident note.

In an interview with The Wall Street Journal, the BoE chief said prospects for the economies of Europe and the US had not changed fundamentally because of the volatility rocking financial markets of late.

The Stoxx 600 oil and gas index surged 5.26% as oil prices rose above $30 a barrel, while the sub-index for basic resources advanced 0.74%.

Prompt month West Texas Intermediate futures gained 6.4% to $31.56 a barrel and Brent crude was up 6.9% at $31.44.

On Friday morning, the chairman of Saudi Aramco described the recent fall in oil prices as "irrational".

Meanwhile, on the data front, flash French, German and Eurozone manufacturing and services Purchasing Managers’ Indexes for January all fell short of expectations. However, as investors entertained the possibility of further ECB stimulus, the soft figures failed to put a damper on things.

Euro/dollar dipped 0.52% to end the day at 1.0812.

In corporate news, Philips slid after the Dutch electronics company said the $3.3bn deal to sell its components business to a consortium of Asian buyers broke down.

In London, Hammerson rallied after announcing an agreement to buy the new Grand Central shopping centre in Birmingham for £335m.