European shares hit seven-year highs ahead of ECB's looming money-printing programme

Mario Draghi is expected to pump hundreds of billions of euros to boost a flatlining recovery and stave off a descent into deep deflation through quantitative easing this Thursday

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The Independent Online

European stock markets have hit seven-year highs as traders bet on a huge boost for shares ahead of a looming money-printing programme this week to prop up the ailing eurozone.

France’s CAC 40, Germany’s Dax and major bourses in Italy and Spain were on the march with rises of up to 1 per cent with ECB boss Mario Draghi expected to pump hundreds of billions of euros to boost a flatlining recovery and stave off a descent into deep deflation through quantitative easing this Thursday.

London’s FTSE 100 edged 0.3 per cent higher as City dealers caught the mood.

IG market analyst Alastair McCaig said: "This is the week equity markets believe the European Central Bank will announce its own version of quantitative easing... as European equity markets hit multi-year highs.

"Certainly the markets’ reaction to disappointing economic data in the last couple of weeks has shown they believe ‘bad news is good’, and as the picture gets a little worse it brings the ECB a step closer to implementing QE."

Economists believe Draghi could launch a €550 million (£419 million) programme.

The brighter mood in European markets contrasted with China, where Shanghai crashed to its worst one-day fall in six years in the wake of a crackdown on brokers taking on new clients to trade with borrowed money.

Eurozone QE will overshadow the gathering of global leaders at the Davos World Economic Forum this week, alongside the Swiss National Bank’s shock decision to scrap the Swiss franc’s link with the euro last week.

The reverberations of the Swiss move are still being felt although the nation’s own stock market stemmed double-digit falls last week with a 3 per cent gain today.

Speculation mounted that Denmark would be the next country to scrap its link with the euro after the Danish krone hit the highest level against the euro since June 2012 today.

Denmark’s central bank has kept the krone tied in a 2.25 per cent band around a rate of 7.46038 to the euro since the 1990s.

There was hope for currency broker Alpari UK, whose clients were left hopelessly exposed by the SNB’s decision.

The West Ham shirt sponsor said on Friday it had entered insolvency but reversed that statement today and said the "board of directors are urgently considering all options including a sale".

A potential buyer is Australian currency broker Pepperstone, which dodged the Swiss chaos and is chasing a "unique opportunity" for cheap takeovers in the wreckage.

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