EUROPE MARKETS: European Stocks Rally Ahead Of ECB Rate Call

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets moved solidly higher on Thursday, as investors waited for a policy decision from the European Central Bank, with analysts increasingly betting on a rate cut for the euro zone.

Climbing for a second day, the Stoxx Europe 600 index rose 1.1% to 321.40.

Among notable movers, shares of Daimler AG added 3.3% after the German car maker said it closed out 2013 with record earnings and gave an upbeat outlook for 2014.

Shares of Vodafone (VOD) picked up 2.8% after the telecoms firm reported a narrower-than-expected fall in third-quarter revenue.

Danske Bank AS climbed 4.2% after the Danish lender proposed paying a dividend for the first time in five years.

Akzo Nobel NV (AKZOY) rallied 7.5% after the Dutch paint and coatings firm said it will continue to work on cutting costs to offset expected soft demand in the year ahead.

On a more downbeat note, shares of H. Lundbeck AS dropped 3.3% after the pharmaceutical firm trimmed its 2014 guidance as it posted a sharp drop in fourth-quarter profit.

More broadly, central-bank meetings were the focal point for Thursday. First, the Bank of England left the size of its bond-buying program unchanged and held its key lending rate at a record low of 0.5%, where it has stood since March 2009. The central bank's Monetary Policy Committee left its asset purchases, the centerpiece of its quantitative-easing strategy, at 375 billion pounds ($611 billion)

At 12:45 p.m. in London, 7:45 a.m. Eastern Time, the rate decision from the European Central Bank is up, which could turn out to be more eventful.

Economists are split as to whether the ECB will cut its key lending rate from its already record-low 0.25% to fight low inflation and tighter money-market conditions. Some argue a rate cut would be premature, while others believe the central bank is keen to be ahead of the curve on inflation and therefore will ease policy further. ECB President Mario Draghi's news conference starts at 1:30 p.m. in London, 8:30 a.m. Eastern Time. Read: Showtime for the ECB: Will it really cut rates?

Ahead of the decision, most country-specific indexes traded higher. The U.K.'s FTSE 100 index gained 0.8% to 6,508.30, while France's CAC 40 index put on 1% to 4,159.05. Germany's DAX 30 index rose 0.9% to 9,202.49.

Shares of AstraZeneca PLC (AZN) dropped 2.8% in London after the drug maker said it swung to a loss in the fourth quarter, as it suffered a $1.76 billion impairment charge due to disappointing sales of its diabetes drug Bydureon.

Outside the major indexes, shares of Imagination Technologies Group PLC rallied 13% after the technology firm said it extended its multiyear licensing agreement with Apple Inc. (AAPL).

Volvo AB advanced 4.4% after the truck maker said it will cut 4,400 jobs in 2014 as it reported a slide in fourth-quarter profit.

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