Euro surges as ECB holds fire

Associated Press
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A man looks at an electronic stock board of a securities firm in Tokyo, Thursday, March 6, 2014. Shares were mostly higher in Asia on Thursday as the standoff over Ukraine between Russia and the West continued to ease and the yen weakened. (AP Photo/Koji Sasahara)

LONDON (AP) — Global markets stabilized Thursday as tensions in Ukraine eased while the euro surged after traders reined in expectations of further easing measures from the European Central Bank.

After the bank kept its monetary policy unchanged, ECB President Mario Draghi made some fairly optimistic remarks about the eurozone economy.

He credited the decision to maintain policy, including the main interest rate at the record low of 0.25 percent, to a run of positive economic data that point to stronger first-quarter growth. That rosier backdrop was confirmed in the ECB staff's upward revisions to growth.

Following his comments, the euro was up 0.8 percent on the day at $1.3844, its highest this year, and some analysts think it won't be longer before Europe's single currency heads even higher.

"The rally in the euro still hasn't eased up and it is currently attempting to break above a massive resistance level," said Craig Erlam, market analyst at Alpari. "The break of this could lead to significant gains in the coming weeks, with a break of $1.40 very likely."

The euro has not breached the $1.40 level since October 2011.

Draghi's comments weren't enough to derail the recovery in the region's stock markets, which have benefited in recent days by the easing of tensions in Ukraine.

In Europe, Germany's DAX closed flat at 9,542.87 while the CAC-40 in France rose 0.6 percent to 4,417.04. Britain's FTSE 100 gained 0.2 percent to 6,788.49 after the Bank of England kept its main interest rate unchanged at 0.5 percent, five years on from its decision to cut to the historic low rate.

In the U.S., the Dow Jones industrial average was up 0.5 percent at 16,435.17 while the broader S&P 500 index rose 0.3 percent to 1,880.15.

The focus in the U.S. is on Friday's release of the February nonfarm payrolls report. The payrolls data often set the market mood for a week or two.

Beyond stocks, the dollar's near-term fortunes could also lie on the payrolls data as traders assess whether the U.S. Federal Reserve will continue to reduce its monetary stimulus at the pace already set.

Earlier in Asia, Japan's Nikkei 225 stock average rose 1.6 percent to 15,134.75 as the dollar headed back toward 103 yen after dropping in previous days on safe-haven buying of the Japanese currency. A lower yen is a boon to the country's exporters.

Elsewhere, Hong Kong's Hang Seng was up 0.6 percent at 22,702.97 and South Korea's Kospi added 0.2 percent to 1,975.62.

Shanghai's benchmark climbed 0.3 percent to 2,059.58 as China's Finance Minister Lou Jiwei, speaking on the sidelines of the national legislative session, said the government could tolerate growth less than 7.5 percent this year provided sufficient new jobs are created.

Assets, like oil and gold, which were bid up sharply on Monday, continued to drift lower too. A barrel of benchmark New York crude was down 0.4 percent at $101.022 while an ounce of gold rose 0.6 percent to $1,348.30.


Elaine Kurtenbach in Tokyo contributed to this report.