Stocks in Europe, Asia rise

Fri, Sep 7, 2012, 01:00

Stock markets in Europe and Asia gained today, and yields on the debt of struggling euro zone nations fell as investors welcomed the European Central Bank's latest bond-buying plan and positioned for a strong US jobs report.

Expectations of a big rise in US nonfarm payrolls numbers, due out at 1230 GMT, have risen since data on private sector employment showed robust growth for last month.

But the markets main driver has been the ECB's new and potentially unlimited bond buying plan, which is hoped will lower the borrowing costs facing indebted nations like Spain and Italy and ease fears over the future of the single currency.

The broad FTSEurofirst 300 index of top European companies was up 0.3 per cent at 1,107.73 points in early trade after climbing 2.6 per cent yesterday when the plan was announced.

"I am positive on the market in the near term. You have got the policy response coming through, valuations are still OK, and the macroeconomic backdrop isn't all that bad. These three things add to the momentum in the market," said Graham Bishop, equity strategist at Exane BNP Paribas.

Reaction to the ECB programme had earlier sent US stocks to multi-year highs and put Asian shares on track for their biggest daily gain in six weeks today.

The gains have lifted the MSCI's world equity index back to levels last seen in early May after a rise of about 2.4 per cent over the past 24 hours.

The euro rose 0.3 per cent to a two-month peak against the dollar of $1.2670 and also hit a two-month high against the safe-haven yen and a one-month peak versus the Swiss franc in response to the ECB plan.

In the debt market Spanish 10-year government bond yields were 19 basis points lower in early trade at 5.89 per cent and below 6 per cent for the first time since May, while equivalent Italian bonds were down 13 basis points at 5.19 per cent.

Reuters