Europe open: Stocks bounce back as investors continue to digest ECB measures

At 0900 GMT, the benchmark Stoxx Europe 600 index was up 1.6%, Germany’s DAX was 2% higher and France’s CAC 40 was 2.1% firmer.

At the same time, West Texas Intermediate was up 2.2% to $38.66 a barrel and Brent crude was up 1.6% at $40.68. The Stoxx 600 oil and gas index advanced 1.7%.

“Traders who managed to hold their nerve through yesterday's late rout will be thanking their lucky stars this morning,” said Mike McCudden, head of derivatives at Interactive Investor.

“Despite the ECB evidently running out of options, US equities managed a late surge and Asian markets largely ignored the panic. Commodities such as oil are lending their support as we see out the week, but one thing looks likely, as the VIX Index slowly starts to trend higher, we may be in for more volatility in the short term.”

On Thursday, the European Central Bank slashed its main interest rate by 5 basis points to 0.00% and increased quantitative easing by €20bn to €80bn from April. Market participants had been expecting a €10bn increase.

In addition, the central bank cut the deposit facility rate by 10bps to -0.40% and lowered the margin lending facility rate to 0.25% from 0.30%.

Stocks initially flew higher on the news but ended in the red as ECB chief Mario Draghi said in the press conference that policymakers were concerned that pushing rates too low could impact balance sheets, pouring cold water over prospects for further rate cuts.

In corporate news, Old Mutual fell after the financial services company said it was splitting up into four main businesses and posted a 5% increase in 2015 profit.

Deutsche Bank was on the front foot despite warning of a challenging first quarter, while London-listed pub chain JD Wetherspoon gained despite reporting a 3.9% decline in first half profit.

Still to come on the data front, the US import price index is at 1330 GMT.