European Central Bank to end stimulus programme later this year

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Shares of Royal Caribbean Cruises jumped 5.1 per cent after the company bought a 66.7 per cent stake in privately-held Silversea Cruises for about $1 billion.

The FTSE 100 outperformed European markets in May, and Bank of America Merrill Lynch's June fund manager survey showed investors' underweight in United Kingdom stocks fell to its smallest in more than a year.

The free trade agreement with Canada does not ensure sufficient protection for Italy's specialty foods, new Agriculture Minister Gian Marco Centinaio said in a newspaper interview.

There's also a political challenge in the form of Italy's new government and weakening export demand.

Euro zone banks had already weakened on Thursday on disappointment that the ECB would keep interest rates ultra-low for longer, as banks' margins suffer from negative interest rates. Sales jumped by, a much stronger than anticipated, 0.8% last month, reinforcing the hawkish comments made from the Federal Reserve on Wednesday evening stating that the U.S. economy was approaching "normal levels".

The rate-sensitive financial sector was the biggest percentage loser of the S&P 500, led by a 1.8 per cent decline in JP Morgan Chase shares, as US Treasury yields fell on news that the European Central Bank would be holding rates steady for longer than many investors expected.

Brent and USA crude futures traded at $76.83 and $66.67 a barrel respectively, to extend their recovery from eight-week lows touched last week. The Euro plunged more than two big figures from above 1.1800 to below 1.1600.

The New Zealand dollar rose against a broadly weaker euro after the European Central Bank said it may not hike interest rates until late 2019 while stronger USA retail sales data also helped lift the greenback.

The Dow Jones Industrial Average rose 53.45 points, or 0.21 per cent, at the open to 25,254.65. Investors were looking for an increase of 0.4 percent in May. The S&P 500 index rose 6.86 points, or 0.2 percent, to 2,782.49.

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The bonds of the region's second most indebted country climbed for the third day as money-market pricing suggests investors don't expect a 10-basis point hike in the deposit rate until December 2019, compared with estimates for September 2019 immediately after the ECB's decision Thursday.

"There's some concern that we're going to see a lot tighter policy".

"I can only think the European Central Bank was so scared of causing a bond market sell-off on the announcement of the end of QE that it chose to cushion the blow with extended forward guidance".

Across the Atlantic, the US Federal Reserve moved to increase interest rates, responding to strong retail sales.

The U.S. dollar edged lower against the Japanese yen on Friday, as President Donald Trump announced hefty tariffs on $50 billion of Chinese imports and Beijing threatened to respond in kind, raising tensions between the world's two largest economies. The currency was down 1.72 percent on the week, positioning it to have its biggest weekly loss since November 2016.

Germany's DAX and France's CAC40 led the stocks rebound, while the euro tumbled back towards $1.17 from well over $1.18.

Government borrowing costs slid too as traders recalibrated for a longer period of sub-zero European Central Bank rates.

As expected, the European Central Bank left interest rates unchanged, .

Will Hobbs, head of investment strategy at Barclays Smart Investor, added: "The big story is the commitment not to raise rates for at least a year". "At the same time, you're moving grudgingly toward that".

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