Euro on shaky ground, stocks up on talk of aggressive ECB easing

Thu Nov 26, 2015 3:09pm EST
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By Dhara Ranasinghe and Alastair Sharp

LONDON/TORONTO (Reuters) - The euro slipped towards seven-month lows, bond yields fell and European shares rallied on Thursday on growing talk of aggressive stimulus from the European Central Bank next week.

The pan-European FTSEurofirst 300 index .FTEU3 settled 0.9 percent higher, adding to Wednesday's 1.4 percent gain, while the Euro STOXX 50 index .STOXX50E added 1.1 percent.

Canada's main stock index .GSPTSE rose 0.25 percent, led by gains for its heavyweight financial sector and some of its biggest miners. [.TO] Wall Street was closed for Thanksgiving, a day after shares closed flat in a pre-holiday lull.

Overnight, Asian stocks closed modestly higher. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.2 percent.

"Expectations surrounding the ECB are running very high and this is driving European markets higher, weakening the euro and helping them do better than U.S. stocks," said Marco Vailati, head of research and investment at Italy's Cassa Lombarda.

"I think and hope the ECB will not disappoint but I realize that it won't be that easy," he said.

Euro zone central bank officials are considering options such as staggered charges on banks hoarding cash and buying more debt ahead of next week's ECB meeting, Reuters reported on Wednesday.

That fueled talk that the central bank is preparing aggressive measures to lift inflation and economic growth in the 19-member euro zone.   Continued...

Various Euro notes are pictured laying on a table in Warsaw February 24, 2012.  REUTERS/Kacper Pempel