Global stocks, bonds
cheer bumper ECB cash handout
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[March 23, 2017]
By Marc Jones
(Reuters) - Euro zone stocks and bonds rallied on Thursday as banks
snapped up almost quarter of a trillion euros of interest-free European
Central Bank cash in what the ECB hopes will be the last outing for one
of its main crisis-fighting tools.
Banks took a whooping 233 billion euros ($251.31 billion) at the ECB's
TLTRO (targeted long-term refinancing operation), over 100 billion more
than had been forecast, fanning hopes of another spending stampede by
The pan-European FTSEurofirst 300 <.FCHE> rose 0.25 percent with
Frankfurt <.GDAXI>, Paris <.FCHE> and Milan <.FCHI> up as much as 0.6
percent and Wall Street <ESc1> set to open higher ahead of a key test of
Donald Trump's policymaking ability. [.N]
Highly indebted Italy, Spain and Portugal and euro zone bank also saw
their bonds rally, as analysts bet that they would be the first items on
the shopping list of many of the 474 banks that had taken the ECB money.
"That (TLTRO) was a policy designed for extraordinary times, we are not
in them now," said Nick Gartside, JP Morgan Asset Management's
international CIO for fixed income.
Markets showed no lasting reaction to Europe's latest terror attack,
which for the second time in 10 years had seen the region's financial
center, London, targeted.
These attacks, including in France, Germany and Belgium last year as
well those in London and Madrid more than 10 years ago, have made little
impact on economic confidence or financial markets in isolation.
Sterling <GBP=D3> started steady and then climbed swiftly above $1.25 as
more-resilient-than-expected UK retail sales data proved that Britain's
consumers aren't being cowered by looming Brexit negotiations and rising
The dollar <.DXY> was also creeping higher with attention firmly whether
or not Trump will get his highly-publicized healthcare changes to roll
back 'Obamacare' passed by U.S. lawmakers.[FRX/]
"What we are getting this week is a questioning of how much of the risk
rally is predicated on future Trump policy," said Michael Metcalfe, head
of global macro strategy at State Street Global Markets.
"There are concerns that this vote (on healthcare reform) will be a
litmus test of how much fiscal expansion he can get through."
After losing 3.5 percent in the past 10 days, the dollar was roughly
steady at 111.05 yen. It gained as much 0.1 percent to $1.0786 per euro
and hovered 0.1 percent higher against the basket of currencies used to
measure its broader strength.
In commodities markets, the focus remained on iron ore prices in China
as they followed up a 16 percent slump on Wednesday by falling to their
lowest in more than two months.
Pressure came from a continued slide in steel and simmering concerns
about demand in China, the world's top consumer. The most-traded iron
ore on the Dalian Commodity Exchange closed down 1.9 percent at 580.50
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A red London bus passes the Stock Exchange in London, Britain,
February 9, 2011. REUTERS/Luke MacGregor/File Photo
The risk rally elsewhere saw gold <XAU=> dip however and oil rebounded,
after touching its lowest since November overnight on data that showed
U.S. inventories, already at a record high, grew by far more than
Analysts said oil had found technical support and was being pushed up as
traders took new long positions after the overnight low, but supply
concerns kept the gains in check.
U.S. crude added 0.75 percent to $48.40 a barrel and global
benchmark Brent climbed 0.7 percent to $50.99.
With several major currency pairs steadying after a week of losses for
the dollar, the biggest FX mover of the day was Australia's dollar <AUD=>,
down half a percent on the back of nerves in China's money market and a
slump in prices for its iron ore exports.
The New Zealand dollar was steady at $0.7046 after its central bank held
interest rates at a record low 1.75 percent, and reiterated it would
remain there for a "considerable" period of time.
MSCI's broadest index of Asia-Pacific shares outside Japan had
advanced 0.2 percent overnight.
Japan's Nikkei closed 0.2 percent higher too, as a weaker yen offset a
political scandal over the relationship of Prime Minister Shinzo Abe and
his wife with a Japanese nationalist education group that bought
China's CSI 300 rose early on hopes that index compiler MSCI may include
A-shares in its indices, but those gains were lost as money began
flowing out of the mainland market through link to the Hong Kong
Wall Street futures were pointing to modest gains, though it was likely
to be tense going ahead of the Trump policy test.
On Wednesday the Nasdaq jumped 0.5 percent and the S&P 500 closed 0.2
percent higher, while the Dow Jones was flat, after all three touched
their lowest levels in about five weeks earlier in the session. [.N]
Trump has been trying to rally support for his plan to repeal the 2010
Affordable Care Act, Democratic former president Barack Obama's
signature healthcare legislation.
Trump and Republican leaders of the House of Representatives have said
they were making progress in their efforts to win over conservative
Republicans who have demanded changes to the legislation. They plan a
vote on the bill, Trump's first major legislation since he took office,
later on Thursday.
"If he can't push through the bill, it would further damage stocks. It
also raises the risk of his other policies, like tax cuts, being
delayed," said Masafumi Yamamoto, chief forex strategist at Mizuho
Securities in Tokyo.
(Additional reporting by John Geddie in London and Nichola Saminather in
Singapore; editing by Richard Lough)
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