Sat, Jul 28, 2012 - Page 15 News List

Markets surging as Draghi vows total support for euro

‘IRREVERSIBLE’:Analysts said that ECB President Mario Draghi’s comments appeared to open the door for another round of direct bond market intervention

AFP, LONDON

European Central Bank (ECB) President Mario Draghi vowed unconditional support for the beleaguered euro on Thursday, sending markets soaring orbit as traders eyed further action from the bank to shore up the eurozone.

In apparently unscripted comments in London, the normally reserved Draghi said his institution was “ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”

Saying that the euro was “irreversible,” Draghi said that part of his bank’s remit was to keep sovereign debt levels under control when they hampered the proper functioning of interest rate policy.

Draghi said again in his London speech that the ECB did not want to “supplement actions that have to be taken by governments.”

“That is not our job,” he said.

Asian markets rallied and the euro held on to strong gains made in New York on Draghi’s remarks.

Tokyo climbed 1.46 percent, or 123.54 points, to 8,566.64, Seoul was 2.62 percent, or 46.69 points, higher at 1,829.16, and Sydney finished 1.50 percent, or 62.1 points, higher at 4,209.8.

Europe’s main stock markets advanced in opening trade yesterday, extending the previous day’s bumper gains, with London’s benchmark FTSE 100 adding 0.35 percent to 5,592.89 points.

ABN Amro economist Nick Kounis said that Draghi had “opened the door for a restart of the central bank’s government bond purchase program,” untapped since February.

“The crisis response looks likely to focus on direct intervention in the government bond market,” he added.

CMC Markets analyst Michael Hewson said that Draghi’s remarks “suggest that the ECB may well do something about capping rising bond yields.”

Attention would now turn to Draghi’s monthly news conference in Frankfurt on Thursday “to see if he means what he says,” the analyst added.

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