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Investment market update

Early Trading

UK markets are expected to open higher this morning, following positive leads from the US and Asia overnight. The FTSE 100 closed 1.8% higher yesterday after the president of the European Central Bank (ECB) hinted that further stimulus was still a possibility.

World Markets

World markets rallied after Wednesday’s sell-off which saw billions wiped off stock markets across the globe. The FTSE 100 Index lifted 100.2 points to 5773.8, after ECB president Mario Draghi told nervous investors there was ‘no limit’ to measures it would take to steady the Eurozone area. The ECB left its key interest rates untouched and did not increase its existing 1.5 trillion-euro (£1.1 trillion) monetary stimulus programme.

Headlines

European Central Bank chief Mario Draghi has said the bank will ‘review and possibly reconsider’ monetary policy at its next meeting in March. He said eurozone rates would ‘stay at present or lower levels for an extended period’ and there would be ‘no limits’ to action to reflate the eurozone. His comments followed the ECB’s regular meeting, where it kept the bank’s benchmark rate unchanged at 0.05%.

Prime Minister David Cameron called on businesses on Thursday to speak out in favour of Britain staying in a reformed European Union, but warned those wanting a quick fix that he would settle only for the ‘right deal’. Cameron, who was attending the World Economic Forum in the Swiss resort of Davos, hit back at criticism that his decision to call a referendum increased global uncertainty, saying he was a democrat who wanted to ‘confront this issue’ once and for all.

The worst start to a year since 2008 for European stocks is doing little to dim the view of the region’s strategists, who are mostly holding on to views that now call for gains of more than 20% through December. The Stoxx Europe 600 Index will rise to 402, according to the average strategist estimate compiled by Bloomberg. While that’s lower than the 415 level forecasters targeted last month, they’re still counting on European Central Bank action and an improving domestic economy to help recover from the decline that sent shares to a one-year low.

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