European stock markets rallied to multi-month and all-time highs on Thursday, spurred by a supportive policy update from the European Central Bank and a rally on Wall Street.
Sentiment was supported by a supportive monetary policy update from the ECB. The ECB left interest rates and monetary policy unchanged in its latest update on Thursday but pledged to pick up the pace on its pandemic-era programme of quantitative easing. The accelerated bond buying comes in response to a recent sell-off of government bonds, which threatens the ECB's stated policy goal of "favourable financing conditions."
The intervention will benefit so-called "periphery" eurozone nations like Spain and Italy, where the spread between government debt and German bunds has been widening in recent weeks.
Italian stocks had been rallying ahead of the ECB's statement and ticked higher on the announcement. Italy's FTSE MIB (FTSEMIB.MI) was up 1% in Milan shortly after the announcement. It ended the day up 0.8% to close at its highest point in a year.
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The euro sold off slightly after the ECB statement. The currency had been rallying against both the dollar and pound ahead of the announcement but pulled back. The euro was flat against the pound (GBPEUR=X) and up 0.4% against the dollar (EURUSD=X) by the time markets shut in Europe.
The FTSE 100 (^FTSE), which sits outside of the ECB's purview, spent much of the day in the red by ended the day up 0.2%.
Sentiment was supported by a continued rally on Wall Street, led by tech stocks. The Nasdaq (^IXIC) was up 2.4% by the time Europe closed, while the S&P 500 (^GSPC) had gained 1.4% and the Dow Jones Industrial Average (^DJI) was 1% higher.
Asian markets had rallied overnight. Japan's Nikkei (^N225) rose 0.6%, the Hong Kong Hang Seng (^HSI) rallied 1.4%, and the Shanghai Composite (000001.SS) gained 2.4%. South Korea's KOSPI (^KS11) rose 1.8%.
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