While you were sleeping: ECB offers support

While you were sleeping: ECB offers support

December 3 (BusinessDesk) - Stocks in Europe and on Wall Street rose after the European Central Bank promised to provide unlimited weekly, monthly and three-month funding until at least April to help stem concern about the euro zone crisis.

Officials have "basically said we will do what it takes and while you can never know what a Band-Aid will look like at any point in time, I think the overall theme is that those Band-Aids will be found," Bob Doll, chief equity strategist for fundamental equities at BlackRock Inc, told Reuters.

Another round of better-than-expected U.S. economic data also supported optimism among investors.

The Dow Jones U.S. Home Construction index gained 4.3% after an index of pending home sales unexpectedly surged in October.

U.S. retailers also reported higher-than-forecast sales for November, while the four-week moving average for jobless claims declined to a two-year low.

In afternoon trading, the Dow Jones Industrial Average gained 0.81%, the Standard & Poor’s 500 Index added 0.99% and the Nasdaq Composite climbed 0.87%.

Banks led gains in the S&P 500, Bloomberg reported, after Goldman Sachs highlighted JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp among its “top stock ideas across financials,” triggering rallies of at least 2.2% in each.

The CBOE Volatility index, Wall Street's so-called fear gauge, dropped 9.08% to 19.42.

In Europe, the Stoxx 600 gained 1.7% to 271.61.

The European Central Bank stopped short of committing to a major bond-buying program to contain the euro zone fiscal crisis, but traders said the central bank had been quietly buying bonds.

ECB bond buying has "been bigger than the last couple of weeks, since yesterday. Yesterday and today have definitely been bigger than usual," one trader told Reuters.

The ECB made no mention of boosting its government bond buying program, despite calls to do so after an 85 billion euro EU-IMF rescue of Ireland failed to alleviate concern that Portugal or Spain might need a bailout as well.

"I say we are constantly alert. We are constantly looking at the situation of the markets," ECB President Jean-Claude Trichet told a news conference.

The ECB kept interest rates steady 1.0% as expected.

The euro, trading around US$1.31 on Thursday, was seen at US$1.32 in one and six months, a Reuters poll of 60 foreign exchange strategists found. The current forecast compared with the respective US$1.40 and US$1.35 predicted last month.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.56% to 80.30.

(BusinessDesk)

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