ING talk of aggressive stimulus from the European Central Bank (ECB) sent the euro towards seven-month lows yesterday, while European shares rallied.
The pan-European FTSEurofirst 300 index settled 0.9 per cent higher, adding to Wednesday’s 1.4 per cent gain, while the Euro STOXX 50 index added 1.1 per cent.
Canada’s main stock index rose 0.25 per cent, led by gains for its heavyweight financial sector and some of its biggest miners. Wall Street was closed for Thanksgiving, a day after shares closed flat in a pre-holiday lull.
Overnight, Asian stocks closed modestly higher. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2 per cent.
“Expectations surrounding the ECB are running very high and this is driving European markets higher, weakening the euro and helping them do better than US stocks,” said Marco Vailati, head of research and investment at Italy’s Cassa Lombarda.
“I think and hope the ECB will not disappoint, but I realise that it won’t be that easy,” he said.
Eurozone central bank officials are considering options such as staggered charges on banks hoarding cash and buying more debt ahead of next week’s ECB meeting.
That fuelled talk that the central bank is preparing aggressive measures to lift inflation and economic growth in the 19-member Eurozone.
This view kept the euro under pressure, and it dipped to $1.060, a day after it tumbled as low as $1.056, its lowest since mid-April.
Against the yen, the euro fell 0.2 per cent to ¥130.12, a day after hitting a seven-month low of ¥129.77.