Reuters: US Dollar Report: Refile-GLOBAL MARKETS-Stocks surge to new highs on ECB bond-buying plan

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Refile-GLOBAL MARKETS-Stocks surge to new highs on ECB bond-buying plan Sep 6th 2012, 17:01 Thu Sep 6, 2012 1:01pm EDT * Euro dips, then recovers after ECB bond plan announced * Euro zone blue chip index, U.S. S&P 500 leap * German bond prices dip, peripheral yields fall * Yields drop at Spanish and French debt sales By Edward Krudy NEW YORK, Sept 6 (Reuters) - The S&P 500 rose to its highest level in more than four years and European blue chip stocks jumped on Thursday after the European Central Bank announced an aggressive bond-buying program to halt the spread of the euro zone's debt crisis. The euro gained against the dollar after ECB President Mario Draghi said the central bank would undertake unlimited, short-dated bond purchases to ease funding pressures on governments that sought help. Draghi said the ECB would not expect better treatment than other creditors in the case of default. But the single currency's gains were limited as strong U.S. private-sector jobs data ahead of Friday's closely watched government employment report boosted the greenback and sent it surging against the Japanese yen. The EuroSTOXX 50 index of euro zone blue-chip stocks jumped about 3.4 percent to its highest level since early April. On Wall Street, the S&P 500 jumped nearly 2 percent to reach its highest level since May 2008. "Clearly, the announcement out of the ECB...as well as the very encouraging jobs data here domestically all helped fuel an already buoyant market," said Joseph Greco, managing director at Meridian Equity Partners in New York. Investors have been expecting an ECB bond purchase plan for weeks, and the details Draghi announced at a news conference were largely in line with expectations. The euro was last up 0.2 percent at $1.2623, off an earlier low at $1.2559. The dollar surged 0.7 percent against the yen. U.S. private employers added a stronger-than-expected 201,000 jobs in August, according to payrolls processor ADP, while the government said new claims for jobless benefits fell last week to the lowest level in a month, upbeat signals for a struggling labor market. The increase in private hiring was the largest since March. Economists still expect the government's more comprehensive employment report due on Friday will show only modest hiring during August. The euro's gains were tempered after Draghi said that the ECB cut its growth forecast for the euro zone, but the euro recovered to trade up 0.2 percent at $1.2627. The euro zone economy will probably contract more than previously expected this year, according to new European Central Bank staff forecasts, which also raised the bank's outlook for inflation for 2012/2013. The Dow Jones industrial average gained 232.74 points, or 1.78 percent, to 13,280.22. The Standard & Poor's 500 Index rose 26.94 points, or 1.92 percent, to 1,430.38. The Nasdaq Composite Index added 63.33 points, or 2.06 percent, to 3,132.60. In the debt markets, safe-haven U.S. Treasury and German government bond prices, which had dipped before the ECB announcement, edged down further, while peripheral euro zone bond prices moved higher. As a result, 10-year German Bund yields were up 8 basis points at 1.5 percent on Thursday, with equivalent Spanish and Italian debt yields dropping to 6.1 and 5.32 percent, respectively. . The benchmark 10-year U.S. Treasury note was down 23/32, the yield at 1.6746 percent. The prospect of future central bank buying also ensured successful debt sales by Spain and France. Spain sold 3.5 billion euros of shorter term debt and France shifted 7.98 billion euros of five-, 10- and 15-year bonds, with both auctions resulting in lower yields than at previous sales. The drop was sharp at the Spanish auction. Commodity prices followed other risk assets higher. Brent crude oil futures climbed $1.66 to $114.75 per barrel. Gold rose to six-month highs. Spot gold climbed 1 percent to $1,708.71 an ounce. Link this Share this Digg this Email Reprints

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