ECB's bond-buy plan lifts shares, U.S. payrolls eyed

Fri Sep 7, 2012 6:55am EDT
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By Richard Hubbard

LONDON (Reuters) - World shares gained on Friday and yields on riskier euro zone government debt fell sharply as investors welcomed the bold measures by European Central Bank to tackle the region's three-year-old debt crisis.

U.S. stock index futures pointed to more gains on Wall Street ahead of the release of August nonfarm payroll data, due at 8:30 a.m. EDT (1230 GMT), which will be key to expectations of more monetary easing by the Federal Reserve. .N

The main driver of the market's rises is still the ECB's new and potentially unlimited bond buying plan, which it is hoped will lower the borrowing costs for heavily indebted nations like Spain and Italy and ease fears over the future of the euro.

The broad FTSEurofirst 300 index .FTEU3 of top European companies, which jumped 2.6 percent on Thursday when the ECB announced the plan, added a further 0.6 percent to 1,111.64 points on Friday.

The euro touched a two-month high against the dollar and the safe-haven yen, while the greenback eased against a basket of major currencies .DXY to a four-month low of 80.87.

"I am positive on the market in the near term. You have got the policy response coming through, valuations are still OK, and the macroeconomic backdrop isn't all that bad. These three things add to the momentum in the market," said Graham Bishop, equity strategist at Exane BNP Paribas.

The initial reaction to the ECB program had sent U.S. stocks to multi-year highs on Thursday with the S&P 500 index .SPX back at levels last seen in May 2008 when the financial crisis was still gathering pace.

Asian shares outside Japan .MIAPJ0000PUS posted their biggest daily gain in six weeks on Friday. They gained an extra boost from a jump in Chinese stocks after authorities approved 60 new infrastructure projects this week in a bid to bolster flagging domestic growth.   Continued...

A man passes an electronic board displaying market indices from around the world outside a brokerage in Tokyo August 23, 2012. REUTERS/Yuriko Nakao