Stocks, euro gain on European bond-buying hopes

Wed Jan 21, 2015 4:35pm EST
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By Michael Connor

NEW YORK (Reuters) - European and U.S. equities rose on Wednesday, lifted by reports the European Central Bank will announce a 50 billion euros per month bond-buying program to boost the euro zone's flagging economy.

U.S. Treasury prices fell while the euro rose against the dollar. A source told Reuters the ECB's Executive Board has proposed a program that would enable the bank to buy 50 billion euros ($58 billion) in bonds a month from March.

The FTSEurofirst 300 index .FTEU3, which tracks European stock markets, turned positive on the news and closed up for a fifth day with a 0.6 percent rise. London's FTSE 100 .FTSE ended 1.6 percent higher. ECB head Mario Draghi will speak to the media at 8:30 a.m. EST on Thursday.

"The ECB rumor was very important. The market's perception was that Draghi was going to disappoint tomorrow in the magnitude" of the program, said Phil Orlando, chief equity market strategist at Federated Investors in New York.

The euro EUR= hit a nearly one-week high against the dollar, at $1.168, and was last at $1.1580, according to Thomson Reuters data.

The expectations of ECB action, with the potential stimulus seen at around 600 billion euros ($690 billion), according to a Reuters poll, kept core euro zone bond yields near record lows.

U.S. stocks posted smaller gains, capped in part by a 3.1 percent slump in International Business Machines (IBM.N: Quote) shares after the company issued a disappointing outlook. IBM, down $4.86 at $152.09, was among the biggest decliners on the S&P.

The Dow Jones industrial average .DJI rose 39.05 points, or 0.22 percent, to 17,554.28, the S&P 500 .SPX ended up 9.57 points, or 0.47 percent, to 2,032.12 and the Nasdaq Composite .IXIC added 12.58 points, or 0.27 percent, to 4,667.42.   Continued...

New 10-euro banknotes are pictured during their presentation at the Austrian national bank in Vienna January 13, 2014. REUTERS/Heinz-Peter Bader