* Euro under pressure as market wagers on ECB easing
* Asian share index back to heights last seen in early 2008
* Upbeat US economic data helps S&P end atop 2,000
By Wayne Cole
SYDNEY, Aug 27 The euro was cracking under
pressure on Wednesday as feverish speculation of further policy
stimulus in the euro zone drove bond yields to all-time lows and
lifted Asian stocks to peaks not seen in almost seven years.
The groundbreaking call by European Central Bank President
Mario Draghi for more action on both the monetary and fiscal
fronts has markets wagering that fresh steps could come as soon
as next week when the central bank's governing council meets.
"The comments have raised expectations that the ECB could
announce even more monetary policy stimulus over coming months,"
said Peter Dragicevich, a senior currency and rates strategist
at Commonwealth Bank of Australia. "The next programme could
include broad-based asset purchases."
He said that euro zone inflation data due on Friday was
likely to show a new low for this cycle of just 0.3 percent and
add to the sense of urgency on policy.
"This will continue to depress swap rates across the curve
and keep the euro heavy."
The single currency broke down to an 11-month low of $1.3154
in Asia, taking it nearer to the Sept. 6 trough of
$1.3104 which also doubles as major chart support.
The euro's weakness helped lift the U.S. dollar index
through its September peak to reach its highest in 13 months at
82.698. The greenback could only manage a minor gain on the yen
to 104.07, short of Monday's 7-month peak at 104.49.
The prospect of yet further lashings of liquidity in Europe
was taken as a positive for emerging markets and MSCI's
broadest index of Asia-Pacific shares outside Japan
gained 0.4 percent to its loftiest since January
After a solid start Japan's Topix was stalled by
stiff chart resistance in the 1,290/1,300 zone where it has
peaked a number of times in the past.
In Europe, financial spreadbetters predicted a pause after
recent gains with the FTSE 100, DAX and CAC 40
all expected to open a shade lower.
On Wall Street the S&P 500 had ended Tuesday above
the 2,000 mark for the first time, adding 0.11 percent. The Dow
firmed 0.17 percent and the Nasdaq 0.29 percent.
EURO YIELDS NOSEDIVE
Investors were cheered by solid data with the Conference
Board measure of consumer confidence rising to its highest level
since October 2007.
Durable goods orders jumped a massive 22.6 percent thanks
entirely to bumper demand for Boeing aircraft, while upward
revisions to past data suggested business investment was
stronger than first thought.
That was in stark contrast to a run of grim economic news in
Europe which saw yields on 10-year German debt
reach a record closing low of 0.943 percent on Tuesday.
The rally on the periphery has been even larger with 10-year
yields down 8 basis points on Spanish bonds and 5 basis points
on Italian debt. Spain already pays less than the United States
to borrow and Italy is about to be granted that privilege.
Markets also kept a wary eye on developments in Ukraine
after Russian President Vladimir Putin met Ukraine's Petro
Poroshenko for two hours of one-on-one talks after six hours of
wider negotiations with European Union officials.
Poroshenko said a "roadmap" would be prepared to agree to a
ceasefire as soon as possible in east Ukraine, while Putin
emphasised it was up to Kiev to work out conditions with
In commodities, gold was hovering at $1,283.60 an
ounce after failing to sustain a bounce to $1,290.80.
Oil prices were steadier for the moment after their long
decline. Brent crude inched up 24 cents to $102.74 a
barrel, while U.S. crude rose 4 cents to $93.90.
(Editing by Jacqueline Wong & Shri Navaratnam)