Shares Rise, Euro Slumps as ECB Hints at Fresh Stimulus
Stocks in major markets gained on Friday, with the benchmark U.S. index poised for its best week in a year, while the euro lost ground against the dollar as Europe's central bank said it was ready to act quickly to boost inflation.
U.S. crude dipped to its lowest level in about three months amid persistent oversupply concerns.
The S&P 500 index was on track for its best weekly gains in a year, while markets in Frankfurt and Tokyo edged higher, as European Central Bank President Mario Draghi offered the strongest hint yet that bank will unveil fresh stimulus measures at its Dec. 3 meeting.
"The comments support expectations of additional, possibly aggressive, stimulus at the (ECB's) December policy meeting," said Shaun Osborne, chief currency strategist, at Scotiabank in Toronto.
By contrast, investors in recent days have increasingly registered expectations that the U.S. Federal Reserve will raise interest rates next month.
The Dow Jones industrial average rose 138.33 points, or 0.78 percent, to 17,871.08, the S&P 500 gained 12.15 points, or 0.58 percent, to 2,093.39 and the Nasdaq Composite added 31.73 points, or 0.63 percent, to 5,105.37.
Nike shares rose 4.7 percent, boosting the S&P index, after the sportswear maker unveiled a $12 billion share buyback program.
The pan-European FTSEurofirst 300 index climbed 0.1 percent, hovering around three-month highs as it tracked to its best weekly performance in a month.
An index of major global markets rose 0.3 percent.
Draghi told a press conference in Frankfurt: "If we decide (on Dec. 3) that the current trajectory of our policy is not sufficient to achieve our objective, we will do what we must to raise inflation as quickly as possible."
The comments put pressure on the euro, which fell against the dollar after two days of gains. It was off 0.6 percent and slipped back below $1.07 against the dollar.
"With the ECB easing policy, I would be very surprised if the euro didn't fall through parity," Mark Burgess, Chief Investment Officer at Columbia Threadneedle Investments, told Reuters' Investment Summit on Friday.
Meanwhile, the dollar rose 0.4 percent against a basket of currencies, resuming its march upward over the past month.
"It's hard not to say that you're bullish on the U.S. dollar," said Ken Lambden, senior investment manager at Barings Asset Management in London said at the Reuters summit this week.
Prices of benchmark 10-year U.S. Treasuries rose 2/32 for a yield of 2.2394 percent.
The stronger dollar was one factor pressuring beaten-down oil prices, as the stronger greenback makes commodities more expensive for holders of other currencies.
Brent crude rose 0.4 percent to $44.36 a barrel, while U.S. crude fell 1 percent to $40.14 a barrel.
"The drivers that pushed prices lower are still there," said Hamza Khan, head of commodity strategy at ING, pointing to the strong dollar and increasingly efficient U.S. shale operations in addition to the overhang of physical oil. "Any rally today is going to have a difficult time finding traction."
Zinc prices surged as much as 5.9 percent after top Chinese smelters agreed to cut output next year by 500,000 tonnes, sparking worries about shortages.
(Reporting by Lewis Krauskopf; additional reporting by Gertrude Chavez-Dreyfuss in New York, Marc Jones, Libby George and Patrick Graham in London)
