European Stocks Rise On Stimulus Hopes

The German DAX 30 index rose 0.79 percent or 52.56 points to 6741.96. Shares of Siemens AG advanced 1.52 percent and those of Volkswagen AG rose 1.08 percent.

The French CAC 40 index rose 0.80 percent or 26.24 points to 3306.43. Shares of Peugeot SA climbed 2.21 percent and those of BNP Paribas SA advanced 1.81 percent.

London's FTSE 100 index was up 0.24 percent or 13.71 points to 5640.92. Shares of Aviva PLC advanced 1.01 percent and shares of Rexam Ltd were up 0.94 percent.

Spain's IBEX 35 rose 0.77 percent or 50.70 points to 6668.30. Shares of Bankia SA climbed 2.01 percent and those of Inditex SA advanced 1.54 percent.

Market confidence was boosted as investors sensed that the central banks, especially the ECB, could announce monetary easing measures to strengthen the global economy. Investors felt that bold measures, including easing in the monetary policy, would give a much-needed thrust to boost liquidity in the European financial system.

Market sentiment was lifted after ECB President Mario Draghi hinted last week that the bank might restart sovereign bond purchases under its Securities Market Program (SMP), which has been dormant for around four months.

"Mario Draghi's verbal intervention to stem EUR weakness this week has already started the ball rolling. Net of any initial weakness on a surprise QE announcement from the ECB next week or at any other time, the EUR stands to benefit significantly from a sizeable, quantifiable programme of SMP purchases," Credit Agricole said in a note.

Market focus will obviously be on the ECB monetary policy decision Thursday. However, on a negative side, given the rally in risk assets in the last few days, a lack of action by policy makers this week could result in significant scope for disappointment in the markets.