GLOBAL MARKETS-U.S. jobs data lifts stocks, ECB comments keep euro down

Fri Apr 4, 2014 8:59am EDT

* Markets rise after U.S. jobs report
    * Euro lower after ECB's easing rhetoric
    * World stocks near 6-year high after third week of gains

    By Marc Jones
    LONDON, April 4 (Reuters) - A solid pace of U.S. jobs growth
pushed up Wall Street stocks futures and the dollar on Friday,
adding to pressure on the euro from signs that the European
Central Bank (ECB) is warming to the once-taboo idea of
aggressive asset buying.
    The March U.S. non-farm payrolls showed 192,000 jobs were
added in March in major test of the argument that the economic
weakness of January and February was due to bad weather and the
recovery of the world's biggest economy was still on track.
 
    Median forecasts had been for a rise of 200,000 in payrolls,
though dealers in the run up to the numbers had been speculating
about a number nearer 220,000.
    "What the markets need more than anything at the moment is a
resilient recovery," Mouhammed Choukeir, Chief Investment
Officer at Kleinwort Benson, said.
    "The only thing that will be hard for people to reconcile is
the recent comments from (Fed chair) Janet Yellen that the
recovery is not yet sustainable and that Fed policy needs to
remain accommodative."
    Futures prices extended gains, pointing to a rise of
around 0.4 percent for Wall Street.
    European shares stretched their gains to 0.4
percent from around 0.15 percent before the data as they eyed a
ninth consecutive positive session.
    Attention was also on the euro and southern European bonds
after Thursday's declaration from the ECB that it was now
seriously considering the kind of aggressive asset buying
employed by the United States, Japan and Britain.
    The euro fell to a five-week low of $1.3680 as it
headed for a third week of net losses against the dollar, while
the government bonds of Greece, Spain, Italy, Ireland and
Portugal all made ground. 
    "If deflation creates huge monetary stimulus that could be
supportive of risk assets," Choukeir said. "But the ECB's
one-size-fits-all policy makes it challenging to be bold."
    The dollar index hit its highest since Feb. 27, while
U.S. government bond yields  cut early
dips to trade flat. The dollar also rose against the yen to
104.13, having topped 104 for the first time since
January.
   

    NOT NOW, BUT MAYBE SOMETIME
    In Europe, the focus remained on what looks to be an
increasing divergence between the ECB's policy outlook and those
of the Federal Reserve and Bank of England.
    Crucially, ECB head Mario Draghi declared on Thursday the
bank's members were "unanimous" on using unconventional easing
if needed. That marked a major change as some countries, notably
Germany, have long opposed steps such as quantitative easing.
 
    European bond yields fell as a result and even Greek 30-year
bond yields slipped below 6 percent for the first
time since the global financial crisis.
    The relentless rally in Greek bonds seen over the past two
years could be given a further leg up later on Friday, with
ratings agency Moody's widely expected to lift at least the
rating outlook of the euro zone's weakest member.
    "There is talk among investors that the country could return
to market as early as next week if Moody's do upgrade it," said
a trader at a market maker in Greek government bonds, referring
to Athens' plans to issue a 2 billion euro five-year bond soon.
 

 (Additional reporting by Anirban Nag; Editing by Louise
Ireland)
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