World stocks and the euro climbed Thursday as the European Central Bank decided to keep special liquidity measures it had previously indicated would soon be withdrawn — and amid speculation that it had entered the market to buy up Portuguese bonds.
In Europe, the FTSE 100 index of leading British shares closed up 125.06 points, or 2.2 percent, at 5,767.56 while Germany's DAX rose 90.98 points, or 1.3 percent, to 6,957.61. The CAC-40 in France ended 77.75 points, or 2.1 percent, higher at 3,747.04.
In the U.S., the Dow Jones industrial average was up 104.33 points, or 0.9 percent, at 11,360.11 around midday New York time while the broader Standard & Poor's 500 index rose 12.81 points, or 1.1 percent, to 1,218.88.
Sentiment has been buoyed by confirmation from the European Central Bank that it will continue to offer whatever banks need at a super-low rate through the first half of next year.
Markets were initially disappointed — evident mostly in a sharp fall in the euro — by the failure of ECB president Jean-Claude Trichet to announce an increase in the pace at which the central bank buys government bonds.
But the currency more than regained its poise, trading higher on the day amid market chatter that the bank might in fact be buying bonds of financially troubled eurozone countries despite Trichet's reticence on the issue.
"The trigger for the change in mood seems to have been heavy buying of peripheral bonds by the ECB," said Geoffrey Yu, an analyst at UBS. "Very quickly the market appeared to conclude that actions were speaking louder than words."
By late-afternoon London time, the euro was trading 0.8 percent higher on the day at $1.3236, having earlier dropped to a low of $1.3066. The euro had been trading around the $1.3170 mark when Trichet took the stage in his monthly press conference in Frankfurt after the bank kept its main interest rate at the record low of 1 percent.
These growing signs that the eurozone government debt crisis may be abating — for now — has shored up markets this week, as has the continuing run of upbeat U.S. economic data.
The U.S. economy will be well and truly at the heart of matters on Friday when the closely watched nonfarm payrolls data for November are published — the payrolls figures often set the stock market tone for a week or two after their release.
"Markets are teed up for a strong rally ahead of tomorrow's non-farm payrolls figures," said Chris Purdy, a trader at Spreadex.
That positive momentum helped investors brush off a rise in new claims for weekly unemployment benefits in the U.. The Labor Department said new unemployment claims rose to 436,000 last week.
In Asia, Japan's Nikkei 225 stock average surged 1.8 percent to close at 10,168.52, at one point hitting its highest intraday level in more than five months.
The dollar's climb over the 84-yen line bolstered Japanese exporters like automakers and electronics companies. Camera giant Canon Inc. rose 2.5 percent, and Sony Corp. rose 0.8 percent.
By late afternoon in London, the dollar had slipped back, trading 0.8 percent lower at 83.56 yen.
Hong Kong's Hang Seng index climbed 0.9 percent to 23,448.78 and the Shanghai Composite index advanced 0.7 percent to 2,843.61. South Korea's Kospi rose 1.1 percent to 1,950.26.
Australia's S&P/ASX 200 jumped 2 percent to 4,676.20 as investors snapped up mining shares.
Benchmark oil for January delivery was up 40 cents at $87.15 a barrel in electronic trading on the New York Mercantile Exchange.
- Sony Corp.
- Jean-Claude Trichet
- European Central Bank
- FTSE 100 index
- government debt crisis