Europe close: ECB pledges unlimited purchases, eases collateral rules
Thu 06 Sep 2012
LONDON (SHARECAST) - -ECB pledges unlimited purchases, eases collateral rules
-Moody’s lowers Portugal’s country ceiling to Baa3 from Aaa
-Single currency again over 1.26
-Spanish 10 year bond yields drop 38 basis points, to 6.03%
-Sweden unexpectedly cuts benchmark rate by 25bp
European equities finished the day sharply higher and not just in the Eurozone periphery. That as the President of the European Central Bank (CB), Mario Draghi, moved to put a stop to the financial crisis.
In his press conference this afternoon Mr.Draghi pledged to leave the ‘door open’ to possibly unlimited bond purchases to aid those Eurozone countries who seek its aid. That, of course, in exchange for strict conditionality.
Almost as important, the ECB eased its collateral rules.
Nevertheless, investors are now asking the inevitable question: will Spain activate this aid or not?
Acting as a backdrop, ex-Federal Reserve Vice-Chairman Donald Kohn was cited as saying that tomorrow’s US employment report could determine whether the country’s central bank moves on the monetary policy front, or not, at its meeting next week.
Coincidentally, today’s macroeconomic releases Stateside printed moderately better than had been expected.
German airline Lufthansa has said it would be open to mediation in its escalating fight with cabin crew over pay and conditions.
French telecom equipment Alcatel-Lucent maker will clarify the details of its latest restructuring plan at a board meeting expected next week, three sources close to the matter have told Reuters.
EU regulators are extending their review of United Parcel Service’s planned takeover of Dutch peer TNT Express.
Deutsche Bank downgraded its view on shares of Nokia to sell from hold; yesterday evening the company launched its new phones to great ‘hype’ but without providing several key details for its product launch.
From a sector stand-point the best performers on the DJ Stoxx 600 were: Banks (4.39%), Automobiles (4.18%) and Basic resources (3.89%).
French unemployment rises
Unemployment in France –excluding its overseas territories- rose to 9.7% in the second quarter, after 9.6% in the first (Consensus: 9.8%).
Other asset classes edge higher
The euro/dollar is now slightly higher, up by 0.26% at 1.2636.
Front month Brent crude futures are gaining 0.510 dollars to the 113.67 dollar mark.