US and European stock prices rose yesterday on hopes the European Central Bank would embark on more stimulus soon to avert deflation in the eurozone, and oil prices showed no sign of rebounding soon from their lowest levels since 2009.
Crude oil prices have slid sharply since mid-2014, tipping monthly euro zone inflation into negative territory for the first time since 2009. The European statistics office estimated that prices were down 0.2 per cent in December from a year earlier.
Investors grew more hopeful that the ECB might roll out a bond-buying programme to prevent a downward price spiral. This helped knocked the euro to a nine-year low and bond yields in several euro zone members to record lows.
“We think they will deliver quantitative easing (bond buying) in the first quarter, and that will offer support to European stocks,” said Robert Parkes, an HSBC strategist in London.
The FTSEurofirst 300 index of top European shares jumped as much as one per cent after three losing sessions. It was up 0.4 per cent at 1,328.46 points in late European trading.
The rebound in European shares revived Wall Street. The Dow Jones industrial average was up 142.81 points, or 0.82 per cent, to 17,514.45, the S&P 500 was up 17.82 points, or 0.89 per cent, to 2,020.43 and the Nasdaq Composite was up 42.85 points, or 0.93 per cent, to 4,635.58.
Tokyo's Nikkei ended flat at 16,885.33.
The MSCI world equity index, which tracks shares in 45 nations, rose 0.37 per cent, to 405.54.
The ECB meets on January 22 but may be reluctant to act aggressively before Greece's general election on January 25. The country might move to exit the euro zone if the left-wing Syriza party wins.
The oil market remained depressed. Brent crude slid more than two per cent early, dipping below $50 a barrel for the first time since early 2009 before bouncing up to just over $51.
By midday in New York Brent and U.S. crude were up from the previous session but still far below last summer's highs.
The euro fell as low as $1.18085 , the lowest since 2009. It last traded at $1.18150, down 0.6 per cent on the day on the EBS trading system.
The dollar also rose against the yen, rebounding from early losses. It was last up 0.9 per cent at 119.43 yen, which was about 2.4 yen below a seven-year peak set in December.
The greenback climbed on encouraging data on US trade and private job growth and higher US. yields. US 10-year Treasury note yields edged up, briefly touching two per cent, while 30-year yields were up one basis point at 2.532 per cent.