European shares get euro boost after ECB comments

LONDON (Reuters) - European shares ended on a high Thursday, buoyed by a weaker euro on the back of cautious comments from ECB President Mario Draghi on inflation, while M&A news sparked some sizeable stock moves.

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, March 7, 2018. REUTERS/Staff/Remote

The pan-European STOXX 600 .STOXX was up 1.1 percent at its close, while Euro zone stocks .STOXXE also rose 1.1 percent.

Though the ECB dropped its pledge to increase its bond buying if needed, comments by President Mario Draghi that policy would remain “reactive” and that measures of underlying inflation were still subdued weighed on the euro, which in turn benefited Europe’s exporter stocks.

“Depending on how long the ECB continues to hover around the exit without going through, the euro may have to soften further,” Ken Odeluga, market analyst at City Index, said.

“In turn, that could open up further breathing space for European shares.”

Merger and acquisition news drove big stock moves once again.

Spanish construction firm ACS ACS.MC rose 8.7 percent after reports it was in talks with Italy's Atlantia ATL.MI to break up Abertis ABE.MC in an effort to avoid a bidding war for the highway concessions company.

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Atlantia, which confirmed preliminary talks with ACS over Abertis, gained 5.1 percent, while Abertis fell 4 percent.

Shares in Hochtief HOTG.DE, which had also bid for Abertis, rose 7.3 percent.

“It’s positive news since instead of a bidding war there will be a division of assets and we’ll get a fairer price and maybe better synergies,” said Stefano Fabiani, fund manager at Italy’s Zenit.

Another Milan-based fund manager said: “It’s particularly good news for ACS/Hochtief since the market didn’t like their offer because it increased leverage.”

Earnings took their toll on some stocks.

French supermarket Casino CASP.PA dropped 3.7 percent after its results disappointed investors. The grocer said profit grew by over 10 percent in France for the year, against market expectations of 14 percent.

A Reuters report that AMZN.O is preparing to sell electronics directly into Brazil, a key market for Casino, could also be weighing on the shares, a trader said.

Hugo Boss BOSSn.DE shares fell nearly 7 percent after the German fashion house struck a more cautious tone on profit as it kept up investment in revamping stores and its website.

Boskalis Westminster BOSN.AS sank 10.8 percent, the worst STOXX 600 performer, after the construction and engineering firm reported full-year earnings and said it would be a "challenge" to match 2017 results.

Axel Springer SPRGn.DE sank 10 percent after results triggered profit taking.

Reporting by Helen Reid; Additional Reporting by Stephen Jewkes; Editing by Danilo Masoni and Andrew Roche