* FTSEurofirst 300 up 0.5 pct, Euro STOXX 50 0.7 pct
* Italy, Spain lead rally as investor bet on ECB stimulus
* Austrian banks in relief rally as Ukraine tensions seen
By Francesco Canepa
LONDON, March 6 Italian and Spanish shares led
European bourses higher on Thursday as investors bet the
European Central Bank would act to stimulate the region's
economy and diplomatic efforts would moderate the Ukraine
Banks in Spain and Italy, two economies which are suffering
from still fragile economic activity and subdued inflation, led
a rally in the Euro STOXX banking index on speculation
the ECB may take action to loosen lending conditions.
Italy's FTSE MIB, up 1 percent, hit a high not seen
since June 2011 while Spain's Ibex 35 was up 0.9
percent, making them the best performers among major European
An ECB source told Reuters the bank, due to hold its monthly
policy meeting on Thursday, would end the so-called
sterilisation of the bond purchases under the bank's Securities
Markets Programme (SMP). Traders speculated the ECB may even
take its deposit rates into negative territory to stimulate
"Some people think he'll cut rates...and that's why the
market is ticking up," Mike Reuter, a broker at Tradition, said.
"If nothing happens at all the market is going to be
disappointed. On a morning like this I'd take profit and wait."
Banks exposed to Ukraine, such as Austria's Raiffeisen Bank
International and Erste Bank, also rallied
as U.S. Secretary of State John Kerry said he expected to meet
Russian Foreign Minister Sergei Lavrov again on Thursday.
While talks so far made little apparent headway, traders
were comforted by the idea conversations were continuing, which
they interepreted as a sign imminent military action was less
At 0908 GMT, the FTSEurofirst 300 index of top
European shares was up 0.5 percent at 1,350.89 points and the
Euro STOXX 50 was up 0.7 percent at 3,157.17 points.
Investors were also combing through a raft of corporate
Shares in French telecom group Orange rose 7.2
percent after the company posted a positive profit outlook,
while Deutsche Telekom fell 4.6 percent after
scrapping its forecast for free cash flow in 2015.
Europe bourses in 2014:
Asset performance in 2014:
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