December 4, 2014 / 3:09 AM / 3 years ago

Euro jumps, bonds sag as ECB puts off stimulus decision

3 Min Read

A trader is pictured at his desk in front of the German share price index DAX board at the Frankfurt stock exchange December 2, 2014.Ralph Orlowski

NEW YORK (Reuters) - The euro rebounded and European bond yields bounced off near record lows on Thursday after the European Central Bank put off until next year a decision on whether to increase its stimulus, a delay that indicated rates will not be pressured lower for the time being.

The ECB Governing Council was unanimous in its willingness to launch measures such as a government bond-buying program with new money if necessary to help revive the euro zone economy.

But markets had hoped for clearer details on if and when the ECB would print money to buy government bonds. Such a step is opposed by Germany, the euro zone's biggest economy.

Yields on euro zone government debt bounced further off record lows and the euro rebounded from a more than two-year low against the dollar after ECB President Mario Draghi failed to unveil plans for more stimulus.

Stocks in the euro zone fell more than 1 percent and MSCI's measure of global equity performance fell, while Wall Street closed slightly lower.

"Investors were hoping for more substance on sovereign bond purchases, but Draghi hasn't given investors anything that is really new," said John Smith, senior fund manager at Brown Shipley in Manchester, England.

The euro EUR= gained 0.60 percent against the dollar to $1.2384, after slipping to a more than two-year trough of $1.2284. The dollar last traded at 119.75 yen JPY=, off 0.02 percent on the day.

German 10-year yields DE10YT=TWEB, the benchmark for euro zone borrowing costs, rose 3 basis points to 0.77 percent, retreating further from record lows of 0.698 percent on Monday.

The benchmark 10-year Treasury US10YT=RR was last up 13/32 to yield 2.2394 percent.

MSCI's all-country world index .MIWD00000PUS, a measure of stock performance in 45 countries, slipped 0.23 percent to 424.04.

The FTSEurofirst 300 .FTEU3 index of top European shares closed down 1.4 percent at 1,380.77, its sharpest one-day drop in seven weeks.

Wall Street traded just below break-even, but the Dow Jones industrial average .DJI briefly rose to set a fresh record intraday high.

The Dow closed down 12.52 points, or 0.07 percent, to 17,900.1. The S&P 500 .SPX fell 2.41 points, or 0.12 percent, to 2,071.92 and the Nasdaq Composite .IXIC lost 5.04 points, or 0.11 percent, to 4,769.44.

Brent crude oil fell below $69 a barrel after Saudi Arabia announced deep cuts in selling prices for Asian and U.S. buyers, a week after refusing to support output cuts championed by some members of the Organization of Petroleum Exporting Countries.

Brent LCOc1 fell 28 cents to settle at $69.64 a barrel. U.S. crude CLc1 settled down 57 cents at $66.81 a barrel, having fallen to 66.09 in early New York trade.

Reporting by Herbert Lash; Editing by David Gregorio and Dan Grebler

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