ECB chief Mario Draghi’s comments sent the euro on a rollercoaster ride yesterday.

AFP/London


Europe’s main stock markets closed higher yesterday after European Central Bank president Mario Draghi hinted that policymakers were prepared to cut rates in June.
The euro hit a two-and-a-half-year peak near $1.40 after the ECB held interest rates at a record low for the seventh straight month, but then dived on hints of more easing.
ECB chief Draghi gave a strong suggestion that the bank could ease monetary conditions in the euro area next month, saying the “governing council is comfortable with acting next time”.
London’s FTSE 100 index of top companies rallied 0.63% to close at 6,839.25 points.
Germany’s DAX 30 jumped 0.90% to finish at 9,607.40 points and the CAC-40 in Paris leapt 1.37% to end the day at 4,507.24 compared with Wednesday’s close.
Sentiment was also lifted by positive news on the US and Chinese economies, analysts said.
“Markets have taken Draghi’s comment about June as an indication that the ECB will loosen policy, combined this with Yellen’s testimony yesterday and rallied sharply on hopes of more accommodative central banks,” said IG analyst Chris Beauchamp.
Federal Reserve chair Janet Yellen on Wednesday repeated her stance that the US economy was still in need of lots of support given the “considerable slack” in the labour market.
The comments helped to drive US stocks higher yesterday, although some selling pressure continued to dog the technology sector amid worries about overvaluations.
Support for buying came from a sharp fall in weekly jobless claims after a three-week surge.
In mid-afternoon trade, the Dow Jones Industrial Average was up 0.57% to 16,612.30.
The broad-based S&P 500 added 0.53 % to 1,888.16, while the tech-rich Nasdaq Composite Index gained 0.92% to 4,105.29.
London shares also took heart from news the Bank of England had kept its key interest rate at a record-low 0.50% and maintained its cash stimulus at £375bn.
Analysts said that apparently conciliatory comments by Russian President Vladimir Putin on the Ukraine crisis on Wednesday may have also boosted market confidence.
“Some slight optimism has returned to the stock markets around the world during the past 24 hours,” said Markus Huber, senior analyst at brokers Peregrine & Black.
“Not only is Russian president Putin finally showing more active interest in de-escalating the Ukrainian crisis... but also Fed chief Janet Yellen (told) investors that the stagnation seen in US first quarter GDP is only temporary.”
Draghi’s comments sent the euro on a rollercoaster ride yesterday.
At about 1240 GMT, the single currency surged to $1.3993, the highest level since October 31, 2011.
It then dipped back to $1.3864, from $1.3911 late in New York on Wednesday, after the rate cut hints.
It also fell to 81.80 pence from 82.04 pence on Wednesday, while the British pound rose to $1.6948 from $1.6953.
“Draghi walked the euro higher by not taking action this month, and then walked it lower by hinting at the potential for action in June,” said Kathleen Brooks, research director at trading site Forex.com.
The price of gold fell to $1,287 an ounce on the London Bullion Market from $1,296 on Wednesday.
On the corporate front, shares in Barclays surged to the top of London’s main index after the embattled British bank announced plans to cut 19,000 jobs by 2016.