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 The ECB left interest rates unchanged, as forecast, but central bank
chief Mario Draghi is expected to unveil revised forecasts in a news
conference beginning at 1230 GMT (8.30 a.m. EDT). U.S. employment
data could be a major factor in determining whether the Federal
Reserve raises rates later this month.
Investors are broadly betting that global monetary policy will be
kept looser for longer as central banks try to mitigate the recent
market turmoil stemming from growing economic worries over China.
"We expect that President Draghi will echo the IMF's call for more
collective action to raise global demand and mitigate financial
risks, while holding out the option of more QE to contain the risks
of euro strength and market volatility on longer-term inflation
expectations," said Lena Komileva, chief economist and director at
G+ Economics in London.
The FTSEuroFirst leading index of 300 shares was up 1.3 percent at
1,414 points. Germany's DAX was up 1.6 percent, France's CAC 40 was
up 1.2 percent and Britain's FTSE 100 was up 1.4 percent.
U.S. futures pointed to a rise of around 0.5 percent on Wall Street,
adding to Wednesday's near 2 percent rise. Despite that rebound,
however, shares have only recovered less than half of the losses
chalked up over the past two weeks.
Japan's Nikkei rose for the first time in four days, gaining 0.7
percent, but weakness in Australia and falls in Asian currencies
drove the MSCI's broadest index of Asia-Pacific shares outside Japan
down 0.2 percent.
China's stock markets, the root of much of the global volatility in
recent weeks, were closed on Thursday.
IMF WEIGHS IN
While global share prices are getting some respite, any relief
rallies may be brief. With uncertainty over policy in the United
States and China, investors expect trade to remain extremely choppy.
Draghi is expected to lower the ECB's growth and inflation outlook
because of falling oil prices and China's economic slowdown, and may
pledge to beef up the bank's bond-buying program if prospects weaken
further.
The euro was unchanged at $1.1230, and the dollar was down 0.2
percent at 120.17 yen.
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The 10-year German Bund yield was down 2.5 basis points at 0.77
percent, while the comparable 10-year U.S. yield was down 2.1 bps at
2.17 percent.
Emerging markets were under more pressure.
The real tumbled to its weakest level since 2002 on Wednesday as
expectations of a growing fiscal deficit fed fears that Brazil would
lose its investment-grade credit rating.
The International Monetary Fund entered the global growth and
inflation debate late on Wednesday, warning of growing downside
risks to the world economy and urging central banks to keep policy
accommodative and supportive.
As Friday's U.S. August employment report and the Fed rate decision
loom, the question for investors is whether the China-inspired risk
sell-off in recent weeks is a big enough shock to justify a delay in
the Fed raising rates.
"The IMF clearly doesn't think raising rates against the modest
global growth backdrop is a good idea," said Societe General
analysts in a note on Thursday.
Oil prices remained volatile after their 25 percent surge late last
month.
Brent crude stood at $50.38 per barrel, slipping further from
Monday's one-month high of $54.32, though some distance from a
6-1/2-year low of $42.23 hit a week earlier.
(Editing by Jeremy Gaunt and John Stonestreet)
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