(MENAFN- AFP) Eurozone stocks got a boost Wednesday on reports that the ECB may launch a bigger stimulus programme than had been expected, while British equities moved higher on falling unemployment.
Frankfurt's DAX 30 index rose 0.41 percent to a new record close of 10,299.23 points, while in Paris the CAC 40 climbed 0.87 percent to 4,484.82 points.
Milan jumped 1.64 percent and Madrid added 0.50 percent.
Meanwhile London's benchmark FTSE 100 index of top companies shot up 1.63 percent to 6,728.04 points, lifted by news that British unemployment has struck another six-year low and expectations that a Bank of England rate hike is a long way off.
Investors widely expect that the European Central Bank will decide Thursday to begin a sovereign bond-buying programme, known as quantitative easing (QE), to boost the sagging 19-nation economy and combat deflation, but analysts and investors remain uncertain over the exact size of the stimulus.
In recent days some analysts have suggested that the ECB's QE programme could include at least 500 billion euros of government debt and up to 250 billion euros of other non-financial corporate debt.
But a report on Wednesday by Bloomberg said the ECB's board had drawn up a proposal to buy 50 billion euros of sovereign bonds per month until the end of 2016, an injection that would be worth 1.1 trillion.
"A leaked ECB report suggesting quantitative easing at a rate of 50 billion euros per month for a year starting in March sent shares in Europe chopping around violently on Wednesday as tensions grow leading into the final announcement on Thursday afternoon," said analyst Jasper Lawler at CMC Markets UK.
- Size of QE 'crucial' -
"The size of this QE package is absolutely crucial for the markets and how the markets will react," Forex.com research director Kathleen Brooks told AFP.
"Anything below 500 billion (euros) would be considered a real disappointment, largely because it would just be a drop in the ocean, especially compared to QE programmes that we've got used to, things that came out of the Federal Reserve or the Bank of Japan."
Jonathan Loynes, chief European economist at Capital Economics, said a figure of 1.1 trillion euros would be around 10 percent of eurozone GDP and put the programme at a similar level to the initial QE programmes in the United States and Britain.
He said if the reports are not true "they have further raised the scope for a major disappointment tomorrow".
Loynes cautioned that even if the headline figure is 1.1 billion euros, the structure of the programme could limit its effectiveness.
There has been lots of discussion in the media that in order to appease Germany, which sees QE as tantamount to printing money and bailing out spendthrift governments, the ECB would reduce risk-sharing in the programme.
This would be done by having national central banks buy and hold the debt of their own countries.
Loynes said: "We will need to see the details of the programme -- particularly with regard to the extent of risk-sharing -- before we can conclude that ECB quantitative easing will be a policy bazooka rather than a peashooter."
While QE would inject more euros into the economy and lead to a weakening of the currency, in trading on Wednesday it nevertheless firmed to $1.1582 from $1.1553 late in New York on Tuesday.
- Tokyo slides on BoJ -
Elsewhere on Wednesday, Tokyo shares fell, countering a broad rally in Asian markets after the Bank of Japan (BoJ) slashed its inflation forecast and held off fresh easing measures after a two-day meeting.
The yen rose against both the dollar and the euro on the news, however, as traders took solace in the BoJ's announcement that it was also raising Japan's growth outlook on signs the economy was rebounding.
Tokyo's benchmark Nikkei 225 index closed 0.49 percent lower.
Japan was the exception, however, as a broad rally across Asian markets saw Hong Kong rise 1.6 percent and Shanghai rally 4.74 percent.
Sydney gained 1.62 percent and Seoul won 0.15 percent in value.
Europe helped pull up Wall Street.
The Dow Jones Industrial Average climbed 0.27 percent to 17,561.78 points in midday trading. The broad-based S&P 500 gained 0.47 percent to 2,032.15 and the tech-rich Nasdaq Composite rose 0.59 percent to 4,6825.54.
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