Investing.com - European stocks extended gains on Wednesday, as growing speculation that the European Central Bank could announce additional easing measures at its policy meeting on Thursday continued to support and as concerns over tensions in Ukraine eased.
During European afternoon trade, the DJ Euro Stoxx 50 rallied 1.22%, France’s CAC 40 climbed 1%, while Germany’s DAX jumped 1.26%.
European equities strengthened amid mounting expectations that the ECB will announce quantitative easing measures as a way to shore up growth after the annual rate of euro area inflation slowed to a five year low last month.
Market sentiment was also boosted after Ukraine's President Petro Poroshenko said he had agreed on a "permanent ceasefire" in eastern Ukraine with Russia.
Earlier Wednesday, data showed that activity in the German and French service sectors slowed in August, while Italy’s service sector contracted, adding to pressure on the bank to act.
A separate report showed that euro zone retail sales fell 0.4% in July, in line with forecasts.
Financial stocks remained broadly higher, as French lenders BNP Paribas (PARIS:BNPP) and Societe Generale (PARIS:SOGN) jumped 1.86% and 2.67%, while Germany's Deutsche Bank (XETRA:DBKGn) surged 2.86%.
Among peripheral lenders, Italy's Unicredit (MILAN:CRDI) and Intesa Sanpaolo (MILAN:ISP) advanced 2.58% and 2.61% respectively, while Spanish banks Banco Santander (MADRID:SAN) and BBVA (MADRID:BBVA) rallied 0.96% and 1.65%.
Elsewhere, LVMH (PARIS:LVMH) surged 2.33% following reports the French luxury goods company plans to distribute its stake in rival Hermes International (PARIS:HRMS) to its shareholders.
German Web-access provider United Internet (XETRA:UTDI) added to gains, up 2.52% after agreeing to buy full control of fiber-optic network operator Versatel GmbH for €586 million.
In London, FTSE 100 gained 0.76%, still supported by gains in the financial sector.
Shares in Lloyds Banking (LONDON:LLOY) climbed 0.41% and HSBC Holdings (LONDON:HSBA) jumped 1.48%, while Barclays (LONDON:BARC) soared 2.54%. The Royal Bank of Scotland (LONDON:RBS) turned lower however, dropping 0.85%.
ICAP (LONDON:IAP) was also on the upside, with shares advancing 0.69% amid reports the world's biggest broker of transactions between banks is seeking to sell its Brazil business serving individuals.
In the mining sector, stocks remained were mixed. Rio Tinto (LONDON:RIO) added 0.25% and Glencore Xstrata (LONDON:GLEN) rose 0.46%, while rivals Fresnillo (LONDON:FRES) and Bhp Billiton (LONDON:BLT) tumbled 1.42% and 1.46% respectively.
In the U.S., equity markets pointed to a higher open. The Dow 30 futures pointed to a 0.38% increase, S&P 500 futures signaled a 0.34% rise, while the Nasdaq 100 futures indicated a 0.32% gain.
Later in the day, the U.S. was to publish data on factory orders.