European stock markets feb 29 2012

European stock markets feb 29 2012 : European stock markets opened slightly higher Wednesday, as investors await the outcome of the European Central Bank's second long-term refinancing operation, the size of which could influence the market mood.

London's FTSE 100 Index opened flat, Frankfurt's DAX gained 0.4% and the CAC-40 Index in Paris also rose buy 0.4%.

"Traders are in two minds as to whether another injection of liquidity from the ECB will propel markets higher or whether it will mark the peak in the recent run-up in equity markets," said Jonathan Sudaria, dealer at Capital Spreads. He noted that expectations for the size of the offering, due around 0515 ET, have varied widely over recent months from a low of €200 billion ($269.24 billion) all the way up to €1 trillion, but consensus estimates seem to be settling around the still vague €300 billion to €600 billion range.

"A higher headline number would have positive first-order implications for broader markets, indicating that 'excess liquidity' is available to euro area depository institutions. The focus will then shift on where such liquidity will eventually be deployed," said Goldman Sachs. Meanwhile, the ECB's president Mario Draghi is making it clear to markets not to automatically expect a third LTRO, encouraging banks to take up the funds while they still can, noted Mr. Sudaria.

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