EUROPE MARKETS: European Stocks Hold Gains After ECB, BOE News

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets posted solid gains on Thursday after European Central Bank President Mario Draghi reiterated his pledge to keep rates low for an "extended period of time."

"While the ECB hasn't made any policy changes at this meeting, [Draghi] was pointing to the very fact the governing council remains ready to react. It won't react only to a weakening in data, but also if the recovery doesn't maintain its pace," said Timo del Carpio, European economist at RBC Capital Markets.

The Stoxx Europe 600 index rose 0.7% to 304.55, closing at the highest level in almost two weeks.

Car makers posted some of the biggest advances in the index after a round of upbeat car-sales data from the U.S. Shares of BMW AG added 6%, Daimler AG climbed 1.4%, and Volkswagen AG picked up 1.2%.

On a more downbeat note, shares of GlaxoSmithKline PLC fell 0.8% after the drug maker said its cancer drug MAGE-A3 missed a trial goal.

No changes at the ECB or BOE

More broadly, investors digested the latest news from Europe's biggest central banks. The ECB kept interest rates at a low of 0.5%, where it has stood since May 2013, which was expected. ECB President Mario Draghi said in a news conference that interest rates will remain at present or lower levels "for an extended period of time," providing investors with a bit of forward guidance.

Draghi first provided the markets with forward guidance at the monthly meeting in July after a period of volatile money-market rates as the U.S. Federal Reserve started to ponder when to scale back its asset purchases. The central bank on Thursday also upgraded its projection for 2013 gross domestic product to a contraction of 0.4% versus a June forecast of a 0.6% contraction.

"He was certainly cautiously optimistic in line with the slightly upward revision to staff forecast, but he seemed more keen to stress that this doesn't change the governing council's view that the monetary policy needs to remain accommodative. The bottom line: he was trying to reflect a message of optimism, but that it is tempered by the fact that the recovery is likely to be fragile and subdued," del Carpio said.

The Bank of England left its key interest rate at a record low of 0.5% and made no changes to its 375-billion-pound ($585 billion) asset-purchase program. The bank issued no statement alongside its rate decision.

U.S. data

Investors also kept an eye on developments related to the Syrian conflict. The U.S. Senate Foreign Relations Committee late Wednesday approved a resolution authorizing President Barack Obama to launch a military intervention in Syria.

U.S. stocks traded higher on Wall Street. The U.S. market was supported by data showing jobless claims fell by 9,000 to 323,000 last week, just a tick above a five-and-a-half year low. Additionally, the ISM services index climbed to 58.6% last month from 56.0% in July, marking the highest level on record.

ADP said private-sector jobs rose by 176,000 in August, which was lower than analysts expected.

The U.K.'s FTSE 100 index added 0.9% to 6,532.44, while France's CAC 40 index rose 0.7% to 4,006.80. Germany's DAX 30 index gained 0.5% to 8,234.98.

Among notable movers, Dixons Retail PLC (DSITY) (DSITY) jumped 5.9% after the U.K. electronics retailer said it received an irrevocable offer from Mutares AG to buy PIXmania.

Shares of Telecom Italia SpA rallied 8.4% on renewed merger speculation. Italian daily la Repubblica reported that Egyptian tycoon Naguib Sawiris may buy a stake in the company amid plans to increase capital to bring in a new investor, according to Reuters. Chairman Franco Bernabe reportedly said at a telecom conference in Brussels that whatever is decided will be discussed at the board meeting on September 19 and following ones. A representative from Telecom Italia declined to comment on the reports.

On a more downbeat note, shares of Aker Solutions ASA lost 1.6% after Nomura cut the oil-services firm to reduce from buy.

Peer firm Saipem SpA was cut to reduce from neutral, sending the shares 1.4% lower.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires