Euro slumps on ECB moves; Wall Street sells off

Thu Sep 4, 2014 5:06pm EDT
 
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By Michael Connor

NEW YORK (Reuters) - The euro sank on Thursday after the European Central Bank unexpectedly cut its ultra-low interest rates even further and said it would start buying loans and bonds next month to prop up the continent's struggling economy.

The move gave the euro, used by 18 nations, its biggest single-day drop since 2011, while boosting the dollar the most against major currencies in more than a year.

Stock prices in Europe climbed to new records, and Wall Street had an early ECB-driven rally, which included new intraday record highs for prominent equity indices. But a late sell-off in energy shares and investor anxieties about U.S. jobs data to be issued on Friday spurred losses for the day.

The Dow Jones industrial average .DJI fell 8.7 points, or 0.05 percent, to 17,069.58, the S&P 500 .SPX lost 3.07 points, or 0.15 percent, to 1,997.65, and the Nasdaq Composite .IXIC dropped 10.28 points, or 0.22 percent, to 4,562.29.

The Standard & Poor's energy industry index .SPNY ended off 1.29 percent as oil prices dropped.

"Energy had some pretty dramatic moves today, which goes hand in hand with the strengthening of the U.S. dollar," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

Faced with signs of further deterioration in the euro zone economy, the ECB cut interest rates that were already at record lows by another 10 basis points, putting its deposit rate further into negative territory.

The euro zone economy flatlined in the second quarter, and the Ukraine crisis is weighing heavily on business confidence.   Continued...

 
A man walks past the London Stock Exchange in the City of London October 11, 2013. REUTERS/Stefan Wermuth