Global stocks rise, dollar slips after global bank move
By Herbert Lash
NEW YORK (Reuters) - Global stocks rallied and the dollar slid on Wednesday after the world's leading central banks moved to ensure that financial markets rocked by the euro zone's escalating debt crisis have sufficient funding.
The U.S. Federal Reserve, the European Central Bank and the central banks of Britain, Canada, Japan and Switzerland said they agreed to lower the cost of existing dollar swap lines by 50 basis points from next Monday, among other measures.
A rally in global stock markets started earlier in the day when China's central bank moved to ease credit strains by cutting reserve requirements for its commercial lenders for the first time in nearly three years.
The Chinese measure and the coordinated move by the major central banks of the developed world comes amid growing concern that the global economy is on a slippery slope as the euro zone struggles to decisively tackle its two-year-old debt crisis.
Both measures bolstered the appetite for risk, lifting assets such as stocks and commodities while leading investors to dump the safe-haven dollar.
The dollar index .DXY fell 1.1 percent to 78.132, and the euro gained 1.3 percent to $1.3492.
European stocks .FTEU3 extended gains to trade 3 percent higher. On Wall Street, stocks zoomed more than 2 percent higher after markets opened.
The Dow Jones industrial average .DJI was up 324.69 points, or 2.81 percent, at 11,880.32. The Standard & Poor's 500 Index .SPX was up 31.60 points, or 2.64 percent, at 1,226.79. The Nasdaq Composite Index .IXIC was up 71.16 points, or 2.83 percent, at 2,586.67. Continued...