Traders work at their desks in front of the Dax board at the Frankfurt Stock Exchange yesterday. The Dax 30 index rose 2.11% yesterday to close at 7,994.31 points.

AFP/London


European share prices rallied and the euro plummeted against the dollar yesterday after the eurozone and British central banks signalled that easy-money policies to stimulate growth will continue for some time.
Caution among investors, after the removal of Egyptian president Mohamed Mursi, was swept aside as traders welcomed news that the central banks would keep measures accommodative in an effort to reboot investment.
The ECB’s decision-making governing council “expects the key ECB interest rates to remain at present or lower levels for an extended period of time,” Mario Draghi said.
“Our exit (from low interest rates) is very distant.”
Speaking to a news conference after the ECB’s governing council voted to hold its key interest rate at an all-time low of 0.50% for the third month in a row, Draghi vowed that “monetary policy will remain accommodative for as long as necessary.”
The talk sent shares sharply higher, with London’s FTSE 100 index of leading shares up 3.08% to 6,421.67 points at the closing bell, Frankfurt’s Dax 30 index rising 2.11% to 7,994.31 points, while in Paris the Cac 40 gained 2.90% to 3,809.31 points.
The Spanish stock market rose by slightly more than 3.0%.
The Bank of England also held its main interest rate steady and held to the amount of its stimulus measures at the first meeting headed by new governor, Canadian Mark Carney.
The bank hinted that it would not lift record-low borrowing costs in the short term.
“Rarely have two rate holds had such a positive and decisive impact on the markets,” said Alister Gaines, Director of CDC Wealth Management.
In Portugal, embroiled in a political crisis, Lisbon’s key PSI 20 index of leading shares rebounded 3.73% to 5,431.60 points, reassured by efforts to prevent the centre-right governing coalition from breaking up.
Portuguese stocks had plunged 5.31% on Wednesday after the shock resignation of two ministers, which had sparked a major selloff in Europe on fresh fears over the eurozone debt crisis.
Tension on the eurozone government debt market, which had risen sharply on Wednesday in reaction to the crisis in Lisbon, eased yesterday.
US markets were shut for the Independence Day public holiday.
The European single currency fell to $1.2922, from $1.3010 late in New York on Wednesday.
Sterling also nosedived to $1.5077 from $1.5278 on Wednesday, while the British currency also dropped versus the euro.
On the London Bullion Market, the price of gold firmed to $1,251.75 an ounce from $1,250 on Wednesday.