European stocks rally on ECB easing, Wall St. sags and euro tumbles

Fri Jan 23, 2015 11:32am EST
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By Michael Connor

NEW YORK (Reuters) - The European Central Bank's plan to pump out about 1 trillion euros to revive the euro zone economy kept stocks in the region on track for their best week since 2011 but knocked the shared currency to fresh 11-year lows.

Wall Street, which rallied 1.5 percent on Thursday's European bond-buying announcement, was off because of soft corporate earnings. U.S. Treasury debt prices jumped as European yields touched record lows and left America's higher interest rates still more attractive to investors.

Oil prices rose on hopes for a boost to global growth from the ECB's move, while the death of Saudi Arabia's King Abdullah added to uncertainty over the plans of the world's biggest crude exporter.

The appetite for riskier assets was intense with traders also driving Italian, Spanish and many other euro zone bond yields to new record lows.

"What the market is focusing on is the potentially open- ended element of the (ECB QE) program," said Emile Cardon, the euro zone strategist at Rabobank.

Led by Greek shares, stocks in Europe were set for their biggest weekly gain in over three years. The ECB's bond-buying scheme helped Greece's ATG share index .ATG rise more than 6 percent.

The FTSEurofirst 300 .FTEU3 index of top European shares was last up 1.4 percent at 1,473.94 points after touching a new seven-year high. Germany's DAX .GDAX and Paris's CAC 40 .FCHI were last ahead over 1 percent.

There were nerves about cliff-hanger elections in Greece on Sunday that polls suggest will be won by the anti-EU/IMF bailout Syriza party. But the ECB's pledge to buy roughly 50 billion euros of government bonds a month from March until September 2016 more than compensated.   Continued...

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