Europe’s main stock markets surged yesterday after the European Central Bank chief Mario Draghi pledged full support for the euro, easing tensions over the eurozone’s long-running sovereign debt crisis.
The ECB “is ready to do whatever it takes to preserve the euro. And, believe me, it will be enough,” Mr Draghi told a conference in London.
Traders welcomed the news, brushing aside a string of mixed company earnings from bluechip companies including Anglo-Dutch oil major Shell and Spanish bank giant Santander.
At close, the Paris CAC 40 leapt 4.07 per cent to 3,207.12 points and Frankfurt’s DAX 30 rose 2.75 per cent to 6,582.96 points. London’s benchmark FTSE 100 index was slightly more subdued, up 1.36 per cent to 5,573.16 points.
Italian shares surged by 5.62 per cent as a successful government bond auction also eased bailout concerns, while the Spanish market soared 6.06 per cent in value.
In the US, the Dow Jones rose 1.23 per cent and the tech-rich Nasdaq was up 0.82 per cent in midday trade.
The euro meanwhile spiked to $1.2290 from $1.2153 in New York late on Wednesday. It had tumbled on Tuesday to a two-year low at $1.2043 on fears over debt-plagued Spain.
European Central Bank (ECB) chief Mario Draghi pledged full support for Europe’s single currency in a key speech yesterday.
The upbeat comments will fix market attention on the central bank interest rate meeting next week, dealers said.
“While it would be nice to think that this morning’s market rally is all about upbeat corporate earnings, this morning’s comments by ECB president Mario Draghi look to have been the main catalyst sending the markets higher,” CMC Markets analyst Michael Hewson said.
“In particular the comments about doing whatever it takes within the central bank’s mandate to preserve the euro has seen markets rebound but the statement that addressing high yields on sovereign debt in the euro area comes within the central bank’s mandate is particularly noteworthy.
“It suggests that the ECB may well do something about capping rising bond yields. Attention will now inevitably shift the focus towards next week’s ECB rate meeting to see if he means what he says,” Mr Hewson added.
In company news, shares in Rolls-Royce soared 4.29 per cent to 865 pence after the British maker of aircraft engines said first-half profits jumped on rising revenues, a bumper order book and the sale of its stake in US-based International Aero Engines.
Spain’s Santander, the biggest eurozone bank by capitalisation, said its second-quarter profit plunged on provisions ordered by Spanish regulators. However, its shares surged 9.33 per cent to €4.46 in afternoon deals as investors focused on the Draghi comments.
On the downside, Royal Dutch Shell’s ‘A’ shares slid 3.68 per cent to 2,106.50 pence after the energy giant said second-quarter net profits tumbled 53 per cent to $4.063 billion (€3.341 billion ) on lower oil prices and slack demand.
Asian markets mostly closed higher yesterday following upbeat earnings results in the region and the US while eurozone fears eased slightly on hopes over the funding of future bailouts.