Europe midday: Stocks tick up as investors chew over ECB announcement

European stocks edged higher in quiet trade as investors mulled over the European Central Bank’s decision to extend its quantitative easing programme and as the focus shifted to next week's Federal Reserve meeting.

At midday, the benchmark Stoxx Europe 600 rose 0.55%, France’s CAC 40 was 0.46% higher and Germany’s Dax was up 0.06%.

Oanda analyst Craig Erlam said: “Mario Draghi and his colleagues have already given us a festive surprise, delivering a lump of coal wrapped in tinsel. While a reduction in asset purchases had been touted, I don’t think markets were expecting it at a time when inflation is still so far below target and the economic outlook only marginally improved.

“Fortunately for the ECB, it’s all in the delivery and Draghi is the master of dressing up what would ordinarily be bad news. His insistence that this is not a taper, combined with the promise to increase purchases again if needed and the removal of certain barriers to the bond purchases, appears to have helped investors look past the reduction. The fact that we appear to be in a very forgiving market right now may also have helped, with investors appearing insistent that the santa rally will make an appearance this year.”

Meanwhile, oil prices were in the black ahead of a meeting of OPEC and non-OPEC members on Saturday to discuss production. West Texas Intermediate rose 0.99% to $51.35 per barrel and Brent crude was up 0.66% at $54.25.

Stocks rallied on Thursday after ECB chief Mario Draghi said the central bank would keep buying government bonds through next year, albeit at lower amounts each month from April.

The ECB said it will buy €60bn a month in government bonds from April 2017 until December 2017, compared to €80bn currently.

On the economic front, figures from Destatis showed Germany’s trade surplus was a little smaller than expected in October, with exports up 0.5% from the previous month and imports 1.3% higher. Analysts had been expecting exports to rise 1% and imports 0.9%.

The seasonally-adjusted trade surplus narrowed to €20.5bn from €21.1bn in September, versus expectations of €21.5bn.

In corporate news, Electrolux shares rose after the Swedish home appliance maker said it expects demand for its products to slow next year.

Digital security group Gemalto reversed earlier gains after announcing an agreement to buy 3M’s identity-management business for $850m.

As far as next week's Fed meeting is concerned, a rate hike has largely been priced in.

Erlam said: "I’m not expecting any surprises from the Fed next week, with markets almost fully pricing in a rate hike and some dovish statements likely to accompany it. The key to the meeting is likely to be how many rate hikes the Fed is forecasting for next year given that markets are currently only pricing in one by November, which I think is too few. Given the Fed’s bullish forecast for four last year and the much improved conditions this time around, it will be interesting to see what approach they take."