European indices on track for best weekly rally since Feb, surprising dovish ECB taper buoys

ECB’s surprising dovish taper announcement on Thursday triggered rally across European equity markets.  The European indices remain on track for its best week since February, having reached its highest level in 11 months yesterday.

European equity indices have been sharply outperforming their US counterparts as the region’s banking sector extended rally to reach its highest level since January, largely driven by a post-referendum surge for Italian lenders.

On Friday, European bourses were consolidating the post-ECB rally. Minor-recovery attempts by the euro from the ECB-led slump weighed down on the exports-oriented stocks, and hence, undermined the sentiment around the region’s equities.

Germany's DAX 30 index was down -0.23 percent to 11,155 levels, while the UK's FTSE 100 index trades marginally higher at 6,941. Among the other indices, the French CAC 40 index gains +0.14 percent to 4,744 while the pan-European Euro Stoxx 50 index inches -0.14 percent lower at 3,184 points.

Meanwhile a brief correction is likely on Wall Street stocks as we head towards the FOMC decision due next week. Investors turn cautious after yesterday’s global equities rally, with Wall Street stocks at record high levels.