Euro jumps, bonds sag as ECB puts off stimulus decision

Thu Dec 4, 2014 4:37pm EST
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By Herbert Lash

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.   Continued...

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.       REUTERS/Ralph Orlowski