Talk of ECB easing props up shares, holds back euro

Mon May 12, 2014 9:09am EDT
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By Marc Jones

LONDON (Reuters) - Fresh talk of looser policy from the European Central Bank kept the euro and euro zone bond yields pinned down on Monday and helped the region's shares rise to a six-year high.

Caution about unrest in eastern Ukraine, where rebels declared victory in a referendum on self-rule, had all but evaporated as U.S. trading neared. Wall Street was on track for early gains of 0.3-0.4 percent.

Hopes of capital-market reform boosted Chinese shares. Indian shares reached record highs on expectations a more business-friendly coalition would win a general election now underway.

European stocks got the week off to solid start as mining firms rallied after an upgrade from JPMorgan and investors moved into position for what is expected to be fresh stimulus from the ECB next month.

One of the central bank's most vocal policymakers, Ewald Nowotny, said on Monday he favored a "package" of easing measures, rather than just another thin slice off the bloc's near-zero interest rates.

The pan-European FTSEurofirst 300 index of top shares had climbed 0.5 percent by 1245 GMT, as a gain of nearly 1 percent by Germany's DAX and 0.4 percent on Britain's FTSE compensated for a near-flat day in France.

In the currency market, Nowotny's comments held the euro near to a one-month low at $1.3760, although it looked to have found a foothold after Mario Draghi sent it spinning last week with a strong hint at a rate cut.

It has shed roughly 1.7 percent since then, after reaching a 2 1/2-year high of $1.3995.   Continued...

The curve of the German share price index DAX board is pictured at the Frankfurt stock exchange May 2, 2014. REUTERS/Remote/Stringer