Stock indices closed higher on expectations for a further stimulus measures by the European Central Bank (ECB). The ECB President Mario Draghi wrote in the letter to Jonas Fernández, member of the European Parliament, on Tuesday that the central bank will review its monetary policy measures at the monetary policy meeting next week as the downside risks to the outlook increased. He noted that the ECB's quantitative easing was working. Draghi also said that the Eurozone's inflation is weaker than expected.
ECB Executive Board member Benoit Coeure said on Wednesday that the central bank monitored the impact of negative rates. He pointed out that many banks could handle negative rates as they were "able to more than offset declining interest revenues with higher lending volumes, lower interest expenses, lower risk provisioning and capital gains".
Meanwhile, market participants eyed the economic data from the Eurozone. Eurostat released its producer price index for the Eurozone on Wednesday. Eurozone's producer price index declined 1.0% in January, missing expectations for a 0.7% fall, after a 0.8% decrease in December.
Intermediate goods prices fell 0.3% in January, capital goods prices rose 0.1%, non-durable consumer goods prices were flat and durable consumer goods prices were up 0.4%, while energy prices decreased 3.2%.
On a yearly basis, Eurozone's producer price index dropped 2.9% in January, in line with expectations, after a 3.0% fall in December.
Eurozone's producer prices excluding energy fell 0.6% year-on-year in January. Energy prices dropped at an annual rate of 8.6%.
Markit's and the Chartered Institute of Purchasing & Supply's construction purchasing managers' index (PMI) for the U.K. declined to 54.2 in February from 55.0 in January, missing expectations for an increase to 55.5. It was the lowest level since April 2015.
A reading above 50 indicates expansion in the construction sector.
The index was driven by a softer growth in output, new orders and employment. Housing activity showed the slowest performance since June 2013.
Indexes on the close:
Name Price Change Change %
FTSE 100 6,147.06 -5.82 -0.09 %
DAX 9,776.62 59.46 0.61 %
CAC 40 4,424.89 18.05 0.41 %