European equities firm as investors eye ECB

Europe's main stock markets rose Monday amid growing hopes that the European Central Bank could unveil a bond-buying programme later this week, while investors digested poor manufacturing data. At close, London's FTSE 100 index of top companies rose 0.82 percent at 5,805.34 points, Frankfurt's DAX 30 added 0.63 percent to 7,014.83 points, while in Paris the CAC 40 rose by 1.19 percent to 3,453.71 points in light trading. In Milan, shares rose 1.10 percent and in Madrid gained 0.18 percent, despite a bailout request to Spain's central government from region Andalusia. Wall Street was closed for a public holiday. This week's focus will be the European Central Bank's meeting on Thursday, amid mounting expectations that its president Mario Draghi could unveil a bond-buying plan to boost debt-laden nations like Italy and Spain. Speaking behind closed doors at a European Parliament briefing on Monday, Draghi indicated an ECB intervention would only include medium-term debt and should not be interpreted as money printing as opponents of bond-buying contend, lawmakers said. ECB bond buying in the past was justified, he said according to the MEPs who spoke after his briefing, to help stabilise and protect the 17-nation eurozone. Draghi's comment helped push the euro up to $1.2598 on Monday, compared with $1.2576 late in New York on Friday. The bullishness on the euro came despite survey data that showed eurozone manufacturing activity contracted for a seventh month in a row in August, and more than initially thought -- but there was a slight improvement on July. The Purchasing Managers Index (PMI), a survey of thousands of eurozone manufacturers compiled by Markit research firm, came in at 45.1 in August, down from a flash estimate of 45.3 although up from 44.0 in July. Any score below the neutral 50 mark indicates contraction. Asian markets mostly rose Monday after more weak Chinese manufacturing data fuelled hopes for a fresh round of monetary easing by Beijing. China's manufacturing activity fell to its lowest level in more than three years in August as the global economic slowdown continued to weigh on the world's largest exporter, HSBC said Monday. The final reading of the closely watched purchasing managers' index (PMI), which gauges nationwide manufacturing activity, slid to 47.6 last month from 49.3 in July, HSBC said in a statement. This was the lowest since March 2009 and marked the tenth consecutive monthly fall, the bank said. It echoed the official PMI figure released Saturday, which hit a nine-month low of 49.2 from 50.1 in July. "Poor manufacturing PMI across much of Asia failed to depress markets this morning, with the focus remaining upon potential economic stimulus from monetary authorities around the world," said Rebecca O'Keeffe, head of investment at online brokerage Interactive Investor. "The big event this week is, of course, the ECB meeting on Thursday. Draghi is being encouraged to engage in unlimited bond buying for those European countries prepared to sign up to strict austerity programmes. "In the wake of (US Federal Reserve chairman Ben) Bernanke's remarks at Jackson Hole last week, the market is also beginning to anticipate a return to some form of quantitative easing (QE) by the Fed in the weeks ahead." Before the weekend, Bernanke's much-awaited endorsement of more stimulus gave stocks a solid boost, though tempered by his picture of a US economy that remains weak and vulnerable. The Dow Jones Industrial Average added 0.69 percent to finish at 13,090.84 points on Friday.