* FTSEurofirst 300 up 0.9 pct, hits highest level since June
* Peripheral banks rally as ECB opens door to June move
* Metro and ProSieben rise after updates
By Francesco Canepa
LONDON, May 8 A key European equity index surged
to near six-year highs on Thursday, led by Italian and Spanish
banks, after the European Central Bank opened the door to more
stimulus measures in June.
The pan-European FTSEurofirst 300 index hit its
highest level since June 2008 on speculation the ECB may cut
interest rates next month, paving the way for further steps such
as an asset-purchase programme.
Italian banks, which own large amounts of their government's
debt, rallied 3 percent on the prospect of lower borrowing costs
if the ECB cuts rates or starts buying sovereign or corporate
The ECB, which is trying to counter the risk of excessively
low inflation, kept its key rate on hold on Thursday. But
president Mario Draghi said it "was comfortable" with the idea
of acting in June, after the bank's staff forecasts are
published early in the month.
"These markets are rallying on the idea that ... he's ready
to act. Having been quite silent, he has now shown his cards,"
Alan Higgins, chief investment officer at Coutts, said. "First a
rate cut, which should be very modest, then some kind of QE. The
fact that they're looking at it is enough to get the market very
An asset-purchase programme would lower borrowing costs
where they are still elevated, such as in southern Europe. That
would help companies struggling with high debt and meagre
profits, such as Italian and Spanish banks or
telecoms group Telecom Italia, which rose 1.2 percent.
The FTSEurofirst 300 was up 0.9 percent at 1,356.42 points
at 1441 GMT, having hit an intra-day high of 1,359.07 points.
The euro zone's blue-chip Euro STOXX 50 index rose
1.1 percent to 3,193.74 points.
Some reassuring updates companies such as the German
supermarket chain Metro helped underpin stocks in what
has been a laucklustre reporting season so far.
Metro AG rallied 3.3 percent as better-than-expected profits
at its cash and carry business offset a weaker contribution from
the Media-Saturn division.
German media group ProSiebenSat.1 rose 5.7
percent after posting a 9.5 percent increase in first-quarter
According to Thomson Reuters StarMine, 50 percent of the
companies on the STOXX Europe 600 index that have
reported quarterly earnings through May 7 have missed estimates,
the highest proportion since the second quarter of 2011.
Also helping market sentiment, data on Thursday showed that
China's exports and imports returned to slight growth in April,
sending a positive signal for the world's second-biggest economy
after a weaker-than-expected start to 2014.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Sudip Kar-Gupta; Editing by Larry