U.S. Markets closed

Euro hits eleven-and-a-half-year low, bonds rise after ECB

Traders work at their screens in front of the German share price index DAX board at the stock exchange in Frankfurt February 2, 2015. REUTERS/Stringer

By Richard Leong

NEW YORK (Reuters) - The euro fell to an 11 1/2-year low against the dollar as U.S. and euro zone bond prices rose on Thursday, after the European Central Bank spelled out its 1 trillion-euro stimulus plan that begins next Monday.

Wall Street and European stock prices were supported by the ECB's latest effort to jumpstart the struggling euro zone economy, which has been a drag on global growth.

ECB President Mario Draghi outlined the central bank's quantitative easing program at a press conference following a scheduled policy meeting. He left the door open for more bond purchases beyond September 2016.

"Mr Draghi is showing that the ECB is determined to continue until it gets the results it needs. They are perfectly aware that they cannot afford to fail," said Mauro Vittorangeli, a senior fixed income portfolio manager with Allianz Global Investors in Paris.

Brent oil prices hovered near $61 a barrel in the absence of a deal with world powers on Iran's nuclear program. An agreement could loosen restrictions on Iran to sell its oil, exacerbating a global supply glut.

The rise in U.S. and European stock prices was limited by disappointing U.S. data and the prospect of an economic slowdown in China.

Beijing announced a 7 percent growth target for the year and signaled that the lowest rate of expansion for a quarter of a century is the "new normal".

The euro fell as low as $1.1005, its lowest since September 2003. It was last down 0.3 percent at $1.1045 but up 0.1 percent at 132.65 yen.

In contrast, the dollar strengthened to 11 1/2-year peak against a basket of currencies ahead of Friday's U.S. payrolls report. The upcoming figures, if they show further improvement in wages and job growth, will reinforce an expectation that the U.S. Federal Reserve will raise interest rates later this year.

The dollar index (.DXY) was up 0.3 percent at 96.230.

U.S. and euro zone bond prices rose. Benchmark 10-year U.S. yield fell to 2.11 percent, while its Italian and Portuguese counterparts and slipped to record lows.

On Wall Street, the Dow Jones industrial average (.DJI) was up 56.27 points, or 0.31 percent, to 18,153.17, the S&P 500 (.SPX) rose 5.05 points, or 0.24 percent, to 2,103.58 and the Nasdaq Composite (.IXIC) climbed 23.23 points, or 0.47 percent, to 4,990.37.

The pan-European FTSEurofirst 300 index (.FTEU3) was up 0.3 percent, while Tokyo's Nikkei (.N225) closed up 0.3 percent.

The MSCI world equity index <.MIWD00000PUS>, which tracks shares in 45 nations, gained 0.3 percent at 430.37.

Brent crude (LCOc1) was last up 12 cents, or 0.2 percent, at $60.67 a barrel. U.S. crude (CLc1) was last up 25 cents, or 0.49 percent, at $51.78 per barrel.

Spot gold prices rose $9.15 or 0.76 percent, to $1,208.60 an ounce.


(Reporting by Marc Jones in London; Editing by Larry King and Bernadette Baum)