* European shares pare gains after ECB
* Draghi Decides not to inject further liquidity into
* FTSEurofirst 300 flat, Euro STOXX 50 up 0.3 pct
* Spain and Italy outperform for second day in a row
By Francesco Canepa
LONDON, March 6 A rebound on European equity
markets fizzled out on Thursday after the European Central Bank
chose not take fresh action to inject liquidity into the
region's financial system, disappointing some investors.
The pan-European FTSEurofirst 300 index gave up its
earlier gains and was flat at 1,344.08 points in late session
The euro zone's blue-chip Euro STOXX 50 index
rose 0.3 percent to 3,144.75 points, but was also down from its
earlier intraday high of 3,158.15 points.
The ECB kept interest rates on hold on Thursday but also
failed to suspend weekly operations to soak up money it spent on
sovereign bonds at the height of the euro zone debt crisis, in a
process known as 'sterilisation'.
A suspension in the so-called sterilisation of the
Securities Markets Programme (SMP) would have added around 175
billion euros ($240.4 billion) in liquidity to the market.
With inflation running in the ECB's "danger zone" below 1
percent - 0.8 percent at the last count - the ECB has discussed
ending operations to drain funds from the financial system, a
back door way of increasing liquidity.
"Disinflation is still a problem, and the market is a little
bit concerned that Draghi does not appear to have changed his
stance on that," said Hantec Markets analyst Richard Perry.
ITALY AND SPAIN OUTPERFORM
The Italian and Spanish stock markets, however, managed to
outperform the flat performance elsewhere in Europe for a second
Italy's FTSE MIB equity index rose by 0.6 percent
to 20,909.40 points, having briefly hit its highest level since
June 2011, while Spain's IBEX rose 1 percent.
The Milan and Madrid markets were helped by gains in Italian
and Spanish banks, which have risen on signs of an economic
recovery in those countries, which were hit hard by the
2010-2012 euro zone's sovereign debt crisis.
A 9.8 percent surge in the shares of telecoms operator
Orange also added the most points to the FTSEurofirst
Orange reassured investors by maintaining its 2014 outlook
and its goal of better margins and lower costs which should help
stabilise its EBITDA (earnings before interest, tax,
depreciation and amortisation).
"The 2014 outlook is bullish on EBITDA stabilisation,"
analysts at Jefferies wrote in a research note.