LONDON: Europe's main stock markets drifted higher Wednesday, shrugging off losses across Asia on the eve of a key ECB meeting as traders look for policy action from central bankers.
The European Central Bank will almost certainly announce new stimulus measures at its policy meeting Thursday, analysts said, as eurozone inflation turns negative and the economic outlook continues to cloud over.
"European shares traded with a positive bias on Wednesday but enthusiasm for the rally that began mid-February appears to be running a little thin on the ground," said market analyst Jasper Lawler at CMC Markets.
Gains faded, but London and Frankfurt still ended up 0.3 percent, with Paris closing 0.5 percent higher.
World indices had fallen heavily on Tuesday and nervous investors in Asia resumed selling Wednesday on worries over the weak global economy.
The International Monetary Fund on Tuesday urged governments to take action to prevent another global recession, warning there was an increasingly "dangerous" view that policymakers are out of ideas or had lost the will.
After disappointing financial markets with what were widely perceived as half-hearted measures in December, ECB chief Mario Draghi will announce bolder policy moves this time round, central bank watchers predicted.
These were most likely to include a further cut in interest rates, an increase in the volume of bonds it buys each month under its so-called quantitative easing or QE stimulus programme and a further extension of that measure beyond its current timeframe of March 2017.
Nevertheless the euro held up against the dollar as renewed doubts swept the market.
"The tension is reaching its peak: will Mario Draghi disappoint the markets?" said John Plassard at Mirabaud Securities in France.
In company news, German power giant E.ON said it booked a 7.0-billion-euro ($7.7-billion) net loss in 2015 and warned that "the course ahead will be tougher and longer than anticipated".
German power utilities have complained that the country's transition from conventional carbon fuels to greener, cleaner sources of energy is squeezing their margins.
E.ON shares were the biggest losers on Frankfurt's DAX 30, down 3.1 percent to 8.07 euros.
Meanwhile BMW was not far behind despite announcing it had clocked up record sales and profits in 2015.
Net profit rose by 10 percent to 6.4 billion euros as the number of vehicles sold rose by 6.1 percent to 2.247 million.
But investors looking for a 1.00-euro increase in the dividend to mark the record results and the company's 100th anniversary were disappointed with the 30 cent increase offered, sending BMW shares down 1.9 percent to 78.54 euros.
Wall Street stocks advanced along with oil prices and European equities, with the Dow Jones Industrial Average up 0.4 percent in late morning trading.
In Asia, investors resumed selling on Wednesday as the optimism that had fuelled this month's rally was broken by another round of weak Chinese data that rekindled fears about the global economy.
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