GLOBAL MARKETS-Stocks rise on Ukraine diplomacy, euro climbs on ECB

Thu Mar 6, 2014 11:16am EST

* Stocks rise on efforts to resolve Ukraine crisis

* Euro hits year high after ECB signals no stimulus

* Bonds fall, gold rises, oil stabilizes

By Richard Leong

NEW YORK, March 6 (Reuters) - World share markets rose on Thursday, supported by hopes diplomatic efforts would cool the crisis in Ukraine, while the euro advanced to its highest level of the year after the European Central Bank signaled its economy needs no additional stimulus.

The latest developments in Ukraine, while still worrisome, have not caused investors to back away from stocks and risky investments on a global scale, as occurred on Monday.

"The markets have adopted to this fluid situation," said Gerardo Rodriguez, senior investment strategist for BlackRock's Emerging Markets group in New York.

MSCI's world equity index, which tracks shares in 45 countries, was up 0.6 percent, and the MSCI emerging market index rose 1.2 percent.

Crimea's parliament voted to join Russia and its Moscow-backed government set a referendum within 10 days on the decision in a dramatic escalation of the crisis in the Ukrainian Black Sea peninsula.

U.S. President Barack Obama took steps to punish those involved in threatening the sovereignty and territorial integrity of Ukraine.

European central bankers offset the geopolitical worries when, as expected, they left interest rates unchanged but offered no signal the ECB will implement unconventional measures such as bond purchases to avert the threat of excessively low inflation and underpin a fragile recovery.

The Bank of England, also meeting on Thursday, kept interest rates unchanged, seeking to give the economy more time to build momentum before removing stimulus.

The ECB's show of restraint on monetary stimulus bolstered the euro, boosting it to $1.3852, the highest since late December, according to Reuters data.

The single currency bought 142.58 yen, up 1.5 percent from late on Wednesday but still below the high of 145.09 set on Jan. 1.

European stocks were also supported by the ECB's decision. The FTSEurofirst 300 index tracking Europe's top shares was steady at 1,344.88.

"European stocks have been quite resilient in the face of the multiple shocks, from the Fed's tapering to the Ukrainian crisis, even though risks seem limited," Banque Leonardo strategist Francois Chevallier said.

On Wall Street, the Dow Jones industrial average gained 82.04 points, or 0.50 percent, at 16,442.22. The Standard & Poor's 500 Index was up 7.15 points, or 0.38 percent, at 1,880.96. The Nasdaq Composite Index was up 7.17 points, or 0.16 percent, at 4,365.14.

On Wednesday, major U.S. equity indexes were little changed, with the S&P 500 down just 0.1 point from its record close on Tuesday.

Earlier, Tokyo's Nikkei closed up 1.6 percent.

Russian shares were a notable exception, falling nearly 1 percent, while the rouble weakened 0.4 percent against the U.S. dollar at 36.1740 roubles.

Due to the resilience in stock prices, investors further pared their holdings in less-risky U.S. and German government bonds. The yield on U.S. 10-year Treasuries rose 4 basis points to 2.74 percent, while the yield on 10-year Bunds gained 5 basis points to 1.65 percent.

In the oil market, Brent crude was off 18 cents, or 0.17 percent, at $107.57 a barrel. U.S. crude was last down $0.31, or down 0.31 percent, at $101.14 per barrel.

Gold traded in a right range with investors awaiting cues from Friday's U.S. jobs data and developments in Ukraine. It rose $7.89 or 0.59 percent, to $1,344.90 an ounce.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.