LONDON (AP) — Global markets rallied Thursday as investors cheered a package of measures from the European Central Bank that is designed to ease Europe's debt crisis and secure the future of the euro currency.
Stocks, the euro and the price of oil have enjoyed a bumper five weeks since ECB president Mario Draghi said in early August that the central bank would do "whatever it takes" to save the euro.
On Thursday, it seemed Draghi met expectations with the measures he unveiled — stocks powered ahead alongside the bond prices of countries such as Italy and Spain.
Draghi said the central bank was creating a new bond-buying program, called Outright Monetary Transactions. With the OMTs — which replace a previous, mothballed bond-buying program — the ECB would buy government bonds with maturities of one to three years. There will be no limits to the amount of purchases it can make.
Countries that seek such help will have to accept policy conditions that will be partly monitored by the International Monetary Fund. The bond purchases will not increase the money supply in the 17-country eurozone, easing fears that they might fuel inflation.
"The ECB did not disappoint in its decision to start a vast bond purchase programme," said Marie Dimon, senior economic adviser at Ernst & Young.
In Europe, Germany's DAX rallied to close 2.9 percent higher at 7,167.33 while the CAC-40 in France surged 3.1 percent to 3,509.88. The FTSE 100 index of leading British shares rose 2.1 percent to 5,777.34.
The euro rose 0.2 percent to $1.2629.
In the U.S., the Dow Jones industrial average was up 1.8 percent at 13,284.31 while the broader S&P 500 index spiked 1.9 percent to 1,430.66.
The program announced Thursday is intended to keep the lid on the short-term borrowing rates of countries like Italy and Spain, giving them time to enact debt reduction measures and economic reforms. The borrowing rates of both countries fell further in response to Draghi's statement.
Many analysts remain skeptical that the plan will ease the overall crisis in the long-run as Europe's economy is headed for recession and governments have a lot of debt to tame.
"Don't depend on the OMT as a cure-all for what ails continental Europe," said Guy LeBas, chief fixed income strategist at Janney Capital Markets.
As well watching developments in Europe, investors are also keeping an eye on a raft of U.S. economic data ahead of Friday's closely watched nonfarm payrolls report for August. Thursday's weekly jobless claims and a private payrolls report from ADP indicate that Friday's figures may be better than anticipated.
Earlier, stock markets in Asia wavered before posting modest gains.
Japan's Nikkei 225 closed marginally higher at 8,680.57. Hong Kong's Hang Seng added 0.3 percent to 19,209.30. South Korea's Kospi gained 0.4 percent to 1,881.24, boosted by tech shares.
Mainland China's Shanghai Composite Index rose 0.7 percent to 2,051.92 while the smaller Shenzhen Composite Index added 1 percent to 859.30.
Oil prices tracked equities higher — benchmark oil for October delivery was up $1.42 at $96.78 a barrel in electronic trading on the New York Mercantile Exchange.