- BoE and ECB announce policy decisions
- German factory orders fall
- US jobs data out later
FTSE 100: 0.90%
CAC 40: 1.23%
FTSE MIB: 1.34%
IBEX 35: 1.39%
Stoxx 600: 1.11%
European stocks rallied as investors weighed German data and awaited the European Central Bank's latest policy decision.
German factory orders dropped 0.5% in December from November when they rose a revised 2.4%, the Economy Ministry revealed today. Economists had predicted an increase of 0.2%.
The data comes ahead of the ECB's meeting today when the monetary authority is expected to keep its policy unchanged despite mounting pressure to take greater measures to curb falling inflation.
Inflation unexpectedly fell to 0.7% last month, well below the ECB's 2% target, fuelling speculation that the central bank would act.
Credit Suisse said it sees the ECB taking the deposit rate marginally into negative territory and cutting its main policy rate in March or April.
However, the broker said the possibility that it would bring forward the decision to today's policy meeting is a risk.
The Bank of England (BoE) is also expected to keep its interest rates unchanged at 0.5% and quantitative easing at £375bn at its meeting today.
The UK's recovery has continued to pick-up and inflation is now in line with the central bank's 2% target.
The BoE has vowed to maintain its benchmark rate at the record low at least until unemployment falls to 7%.
However, the BoE's Governor Mark Carney may need to change his forward guidance as the jobless rate has fallen faster-than-expected to 7.1%.
"With the UK well on its way to recovery and the latest inflation readings falling perfectly in line with the central bank's target, the BoE is very unlikely to tinker with either tool this month, or at any meeting in the near future for that matter, unless of course something drastically changes," Craig Erlam, analyst at Alpari UK, said.
Following the ECB and BoE rate decisions, the attention will turn to data out in the US including initial jobless claims and Bloomberg's consumer confidence.
AstraZeneca declined after the UK drugmaker forecast 2014 profit will decrease more than analysts had forecast.
Alcatel-Lucent was higher as the French network-equipment vendor posted its first quarterly profit in two years. Fourth-quarter net income was €134m, compared with a €1.56bn loss a year earlier.
Pohjola Bank rose as Finland's OP-Pohjola Group offered to buy the remaining part of its publicly-traded subsidiary for 16.80 euros a share.
Daimler advanced after the luxury vehicle maker posted a 45% rise in quarterly profit.
Volvo gained after reporting fourth-quarter operating profit that beat projections and saying it will cut 4,400 jobs.
Credit Suisse Group dropped after posting fourth-quarter profit that fell short of analysts' estimates.
The euro fell 0.07% to $1.3523.
Brent crude futures rose $0.319 to $106.590 per barrel, according to data from the ICE.