Wall Street up 1.5 percent, euro at 11-year low on debut of ECB plan

Thu Jan 22, 2015 5:28pm EST
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By Michael Connor

NEW YORK (Reuters) - Wall Street jumped 1.5 percent and European shares climbed to a seven-year high on Thursday as world markets cheered the European Central Bank's new stimulus program, worth more than 1 trillion euros, while the euro slipped to an 11-year low.

Investors readying for a rise in global liquidity initially lifted U.S. Treasuries, whose relatively rich yields grew more attractive with prospects of lower euro zone bond yields, before prices turned lower.

"It's likely to impact yields everywhere," said Aaron Kohli, an interest rate strategist at BNP Paribas in New York. "When you put this much stimulus into the markets, it's going to go other places that you hadn't intended, and one of those places is going to be U.S. debt."

The ECB's program to buy euro-zone government bonds, along with its existing schemes, will pump 60 billion euros a month into the euro zone economy. It is set to run from March until September 2016.

ECB President Mario Draghi made clear the plan could be extended if the bank felt that was necessary.

Robust U.S. economic data added to gains on Wall Street, where the Dow Jones industrial average .DJI provisionally ended ahead 260.6 points, or 1.48 percent, at 17,814.88, the S&P 500 .SPX rose 31.08 points, or 1.53 percent, to 2,063.2, and the Nasdaq Composite .IXIC added 1.78 percent to 4,750.40.

Thursday's gains turned the S&P and Nasdaq index positive for 2015 to date, with banks leading the gains.

Europe's pan-regional FTSEurofirst index .FTEU3 ended up 1.6 percent, as Scandinavia and eastern European markets rose in tandem. London's top stock index .FTSE added 1 percent and touched a four-month peak in a sixth straight winning session.   Continued...

Traders work on the floor of the New York Stock Exchange January 21, 2015. REUTERS/Brendan McDermid