The euro tumbled
on Tuesday and the region's stocks and bonds jumped after the European
Central Bank signalled it would speed up its 1 trillion euro bond-buying
programme for the next two months ahead of an expected summer lull.
World
stocks were already testing all-time highs after another jump in
Chinese stocks and a record close on Wall Street, and European markets
shot up after top ECB policymaker Benoit Coeure talked of adjusting the
bank's buying programme.
He said that the speed of the recent spike in bond yields, which has effectively wiped out the benefits of QE, was worrisome and that the ECB could "moderately" increase its buying in May and June, and possibly in September, to ensure it doesn't fall behind on its target over summer.
That pushed the euro EUR= back below $1.12 for the first time in a week and the FTSEurofirst 300 .FTSE jumped 1.2 percent as gains of as much 1.9 and 2 percent on Germany's DAX .GDAXI and in Paris .FCHI outpaced a 0.4 percent rise on London's FTSE .FTSE.
Bond yields, which move inversely to prices, also tumbled, with those on 10-year German Bunds DE10YT=TWEB down 7 basis points and Italian and Spanish equivalents down 9 basis points.
"There
is a sense the comments from the ECB indicate a growing push back
against the sell-off in bond markets that's been in place for the past
month or so, and a push back against both euro strength and market
volatility," said Manik Narain, a UBS strategist.
The moves were compounded as France's central bank governor Christian Noyer, also an ECB member, said the bank was "ready to go further if necessary" with its easing measures, and came amid another mixed set of European data.
Germany's ZEW sentiment survey deteriorated far more sharply than expected in May against the backdrop of bumpy financial markets.
A small rise in core euro zone inflation, meanwhile, was offset by the UK where it turned negative for the first time since the 1960's. That knocked sterling GBP=D4 as it fell for a third straight day against a broadly stronger dollar.
Fears of a Greek bankruptcy also rumbled in the background even as the country's top politicians vowed to conclude a cash-for-reform deal with its lenders.
"I think we are very close (to a deal) ... let's say in a week," Greek Finance Minister Yanis Varoufakis said in a TV interview on Monday night. "Another currency is not on our radar, not in our thoughts," he added.
German Chancellor Angela Merkel and France's leader Francois Hollande said at a meeting in Berlin that they both wanted Greece to stay in the euro, although Merkel stressed that Athens needed to speed up talks.
He said that the speed of the recent spike in bond yields, which has effectively wiped out the benefits of QE, was worrisome and that the ECB could "moderately" increase its buying in May and June, and possibly in September, to ensure it doesn't fall behind on its target over summer.
That pushed the euro EUR= back below $1.12 for the first time in a week and the FTSEurofirst 300 .FTSE jumped 1.2 percent as gains of as much 1.9 and 2 percent on Germany's DAX .GDAXI and in Paris .FCHI outpaced a 0.4 percent rise on London's FTSE .FTSE.
Bond yields, which move inversely to prices, also tumbled, with those on 10-year German Bunds DE10YT=TWEB down 7 basis points and Italian and Spanish equivalents down 9 basis points.
The moves were compounded as France's central bank governor Christian Noyer, also an ECB member, said the bank was "ready to go further if necessary" with its easing measures, and came amid another mixed set of European data.
Germany's ZEW sentiment survey deteriorated far more sharply than expected in May against the backdrop of bumpy financial markets.
A small rise in core euro zone inflation, meanwhile, was offset by the UK where it turned negative for the first time since the 1960's. That knocked sterling GBP=D4 as it fell for a third straight day against a broadly stronger dollar.
Fears of a Greek bankruptcy also rumbled in the background even as the country's top politicians vowed to conclude a cash-for-reform deal with its lenders.
"I think we are very close (to a deal) ... let's say in a week," Greek Finance Minister Yanis Varoufakis said in a TV interview on Monday night. "Another currency is not on our radar, not in our thoughts," he added.
German Chancellor Angela Merkel and France's leader Francois Hollande said at a meeting in Berlin that they both wanted Greece to stay in the euro, although Merkel stressed that Athens needed to speed up talks.
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