European stocks rise third day amid expectations of ECB stimulus

FRANKFURT – European stocks advanced for a third day, extending their highest level since 2008, amid investor expectations the European Central Bank will announce a plan for quantitative easing this week.

The Stoxx Europe 600 Index added 0.2 percent to 353.18 at the close of trading. The equity gauge pared gains in the final hour after earlier increasing as much as 0.7 percent. Stocks climbed to a seven-year high on Friday as rising oil producers outweighed a slump in Swiss shares. Switzerland’s SMI Index rebounded 3.2 percent Monday after posting its worst week since 2008 following the Swiss National Bank’s surprise move to end a cap on the franc.

“Expectations of more liquidity measures from the ECB have spurred European markets higher,” said Guillermo Hernandez Sampere, who helps manage about 150 million euros ($174 million) at MPPM EK in Eppstein, Germany. “The market is waiting for Thursday’s ECB decision and how big the QE program will be. Mr Draghi’s fight against deflation will open the next chapter.”

Mario Draghi will make his biggest push yet to steer the euro area away from deflation by announcing quantitative easing on Jan. 22, according to 93 percent of respondents in a Bloomberg News survey. The ECB president will probably announce a 550 billion-euro bond purchase program, economists say. That would top the 500 billion euros in models presented to officials this month.

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Italian banks

Italian lenders rose as officials familiar with the matter said the government is drafting legislation to force the country’s largest cooperative banks to become joint-stock companies to improve their governance.

Banco Popolare SC, Italy’s fourth-largest lender, rose 8.3 percent, Banca Popolare di Milano Scarl jumped 15 percent, and Banca Popolare dell’Emilia Romagna SC climbed 8.5 percent.

Schindler Holdings AG added 3 percent after raising its profit estimate for 2014 to about 900 million francs ($1.04 billion) from as much as 865 million francs previously.

Telefonica SA rose 2.3 percent. Hutchison Whampoa Ltd. is exploring a purchase of the Spanish company’s wireless unit O2 in the United Kingdom as billionaire Li Ka-shing’s company weighs expansion in Europe, according to people familiar with the matter.

Total SA and BP PLC dragged a measure of energy stocks lower. Oil slid after capping its first weekly gain in two months, as investors weigh rising OPEC output against speculation supply from outside the group will slow.

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