European shares buoyant as German Ifo spurs ECB cut hopes

Wed Apr 24, 2013 5:24am EDT

* FTSEurofirst 300 up 0.3 percent

* German Ifo below expectations, fuels rate cut hopes

By Tricia Wright

LONDON, April 24 (Reuters) - European shares advanced on Wednesday, building on the previous session's hefty gains, after the German Ifo survey came in well below forecasts, adding to expectations of more monetary easing.

The FTSEurofirst 300 hit a high of 1,188.56 shortly after the data and was up 0.3 percent at 1,186.22 by 0900 GMT.

The index failed to match its 2.4 percent jump on Tuesday - its biggest gain since August 2012 - after weak German data that fuelled hopes of a European Central Bank rate cut.

"Expectations of a rate cut are now baked into the price. I don't think you can expect the same miracle to work twice... certainly not two days in a row," said Chris Beauchamp, market analyst at IG Index.

"It reinforces yesterday's weaker economy theme, but now people are thinking they might cut rates, but... it's not really going to kickstart the European economy in any meaningful way. Slightly cooler heads prevailing today."

Germany's Ifo survey fell for a second consecutive month in April, signalling that Europe's largest economy is struggling to pull away from a contraction at the end of last year due to weakness in both its euro zone and Chinese export markets.

The European Central Bank meets next week and there is growing speculation that a slew of weak economic data and subdued inflation will drive it to cut rates.

The euro zone's blue chip Euro STOXX 50 firmed 0.6 percent to 2,679.69, following a 3.1 percent advance on Tuesday which saw it break above its 50- and 100-day moving averages, leading some analysts to adopt a more positive stance.

"I think the next major target will be this year's highs around 2,750, although we won't necessarily hit that this week. Along the way, I expect the index to find resistance around 2,682, 2,692 and 2,717 (previous levels of support and resistance)," said Craig Erlam, analyst at Alpari.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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