Global stocks rise as low oil prices feed ECB stimulus hopes

Wed Jan 7, 2015 4:22pm EST
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By Richard Leong

NEW YORK (Reuters) - U.S. and European stock prices rose on Wednesday on hopes the European Central Bank would embark on more stimulus soon to avert deflation in the euro zone, while oil prices showed no sign of rebounding from their lowest levels since 2009.

Crude oil prices have fallen 50 percent since mid-2014, tipping monthly euro zone inflation into negative territory for the first time since 2009. The European statistics office estimated that prices were down 0.2 percent in December from a year earlier.

As a result, investors are growing more hopeful that the ECB might roll out a bond-buying program to prevent a downward price spiral. Those expectations have helped knock the euro to a nine-year low and bond yields in several euro zone members to record lows.

"The deflationary data suggested the ECB will be justified in doing more and that is probably what people are betting on right now," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

The FTSEurofirst 300 index of top European shares .FTEU3 jumped as much as 1 percent after three losing sessions. It closed up 0.5 percent at 1,330.20 points.

The rebound in European shares, together with positive jobs and trade data, revived Wall Street with the Standard & Poor's 500 snapping a five-day losing streak, the longest in about 13 months.

The Dow Jones industrial average .DJI ended up 211.79 points, or 1.22 percent, to 17,583.43, the S&P 500 .SPX closed up 23.24 points, or 1.16 percent, to 2,025.85 and the Nasdaq Composite .IXIC finished up 57.73 points, or 1.26 percent, to 4,650.47. [.N]

Tokyo's Nikkei .N225 ended flat at 16,885.33. [.T]   Continued...

Traders are pictured at their desks in front of the German share price index DAX board at the Frankfurt stock exchange January 7, 2015. REUTERS/Remote/Stringer