European stocks pushed higher Friday on fresh signals the ECB will launch a bond buying stimulus programme next week, while in the forex market there was more fallout from the Swiss surprise.
In afternoon trade London's FTSE 100 shares index was up 0.34 percent compared with Thursday's close to 6,521.02 points.
Frankfurt's DAX 30 added 0.63 percent to 10,095.67 points and the CAC 40 in Paris rose 0.86 percent to 4,360.31.
However Switzerland's SMI shed 4.49 percent to 8,023.71 points, still reeling from the Swiss National Bank (SNB) abruptly ending Thursday its policy to hold down the value of the franc, which saw the currency soar.
The SNB came under fire Friday for its surprise withdrawal of the floor of 1.20 francs to the euro, as the sharp rise of the currency threatens causing a slump in the export-dependent economy and has bankrupted several foreign exchange broker firms worldwide.
A brokerage in Britain and another in New Zealand declared insolvency Friday as they were caught out by the swift rise in the franc, while the shares of a US brokerage were suspended.
The euro stabilised at 1.0033 Swiss francs. On Thursday, the Swiss unit had surged 30 percent to 0.8517 before ending the day at 1.0035, a gain of around 15 percent.
The SNB had been defending the exchange rate floor since September 2011 in an effort to protect the country's vital export and tourism industries, even buying massive quantities of foreign currencies to do so.
The rate was introduced as the eurozone crisis sent investors flocking to the haven currency. More recently, the Russian ruble crisis put renewed pressure on the franc.
But the bank, which less than a month ago vowed to enforce the exchange rate floor "with the utmost determination", said Thursday it was no longer needed.
- Waiting for the ECB -
Focus was also firmly on the European Central Bank, which will decide on the scale of a planned sovereign debt purchase at next week's meeting, a board member said Friday, in the clearest sign that the ECB will launch the controversial stimulus measure.
"We will take the American and British experiences into account in order to determine the amount of debt to buy so as to reestablish confidence and bring inflation back to a level close to and lower than 2.0 percent," Benoit Coeure told the French newspaper Liberation.
It comes as official data on Friday revealed that inflation in Germany, Europe's biggest economy, slowed to just 0.2 percent in December, its lowest level in more than five years, and averaged 0.9 percent for the whole of 2014.
The chronically low level of inflation across the single currency bloc has fuelled concern the region could slip into deflation -- a sustained and widespread drop in prices. Britain too risks falling into deflation later this year.
While falling prices may sound good for consumers, deflation can trigger a vicious spiral in which businesses and households delay purchases, throttling demand and causing companies to lay off workers.
Such concerns have fuelled speculation that the ECB could launch a programme of sovereign bond purchases known as quantitative easing or QE when it holds its first policy meeting of the year next Thursday.
The Swiss central bank's decision to abandon the currency cap "is a major move and has several consequences not least of which is to inject a fresh deflationary shock into the system", noted Neil MacKinnon, economist at VTB Capital financial group.
"Now the markets expect the ECB to announce QE at next week's meeting. If they don’t the markets will understandably be very disappointed and this will just create fresh volatility and downward pressure on the major equity markets."
- Euro weakens -
The euro weakened on the increasing certainty of an ECB bond buying programme, which would inject funds into the economy.
It struck $1.1543 in afternoon trading, its lowest point since mid-November 2003. It traded at $1.1623 late on Thursday.
US stocks also pushed upwards at the start of trading, with the Dow Jones Industrial Average climbing 0.27 percent in the first five minutes of trading to 17,367.14 points.
The broad-based S&P 500 added 0.32 percent to 1,999.08, while the tech-rich Nasdaq Composite Index gained 0.36 percent to 4,587.27.
Asian equities were mostly down. Tokyo tumbled 1.43 percent, Sydney shed 0.60 percent in its fifth consecutive losing session, Seoul slumped 1.36 percent lower, and Hong Kong fell 1.02 percent.
However, Shanghai rose 1.20 percent on the expectations that the government will unveil new economy-boosting measures.