* European shares, euro stage recoveries after ECB-linked
* ECB pointer to future action pulls Spanish debt yields
* Markets await U.S. jobs data due at 1230 GMT
By Richard Hubbard
LONDON, Aug 3 European shares and the euro
surged and Spanish bond yields eased off their highs on Friday
as investors decided the European Central Bank was committed to
tackling the region's debt crisis despite taking no action this
U.S. stocks were also poised for a firm start on Wall Street
as markets awaited the July non-farm payrolls report, due at
1230 GMT, which will be key to short-term sentiment and are
expected to show job creation running at weak levels.
The ECB had kept rates unchanged and dashed hopes of any
immediate action to ease the borrowing costs of Spain and Italy
on Thursday, although it did suggest that under certain
conditions it would consider purchasing bonds,
"There are a lot of people out there taking a reassessment
of what (ECB President Mario) Draghi said yesterday," said Lutz
Karpowitz, currency strategist at Commerzbank. "It's rather
difficult to believe they will really refrain from stepping into
The prospect of a future policy response helped lift the
euro by 0.6 percent to around $1.2260 after it had
skidded by nearly three cents on Thursday to $1.21335 in initial
reaction to the ECB announcement.
The FTSEurofirst 300 index of top European shares
was up 1.5 percent at 1,070.93 points, on track for its ninth
weekly gain in a row and extending its longest run of weekly
rises since mid-2005.
The benchmark index was recovering from a drop of 1.2
percent made after the ECB's decision, which had followed a
promise from Draghi last week to do whatever it takes to save
the common currency, within the bank's mandate.
"Draghi is keeping investors in suspense, he's basically
winning time. But at some point, we need a clear plan, not just
threats, otherwise the market will remain very erratic," said
Alexandre Le Drogoff, fund manager at Talence Gestion, in Paris.
The belief that the ECB was a step towards a new round of
bond buying encouraged some investors to buy shorter dated
Spanish and Italian debt, bringing yields off their highs across
Spanish 10-year yields were down 1.5 basis
points on the day at a still elevated 7.07 percent and off early
highs of around 7.4 percent.
Equivalent Italian yields were about 22 basis
points lower on the day at 6.11 percent, having risen as high as
6.45 percent in early trade.
Spain has no bond sales scheduled before Sept. 6 and some
analysts say once the ECB decides to intervene, it could do so
forcefully, resulting in much lower costs of borrowing for these
countries than would otherwise be the case.
"If the euro zone can agree then it will potentially lead to
significant intervention in the markets," Gary Jenkins, managing
director of Swordfish Research said in a note.
COMMODITIES EYE PAYROLLS
Speculation that weak U.S. payrolls data may prompt the U.S.
Federal Reserve into a third round of bond purchases at its next
policy meeting in September kept commodity prices firmer.
The report is forecast to show a rise of 100,000 in July,
after an 80,000 increase in June, with the unemployment rate
seen static at 8.2 percent.
"If we get a good number, it shows the (U.S.) economy's
maybe better than we thought. If we get a bad number, then
people think it's going to force the Fed's hand to do more,"
David Jones, chief market strategist at IG Index said.
Brent crude gained 79 cents to $106.69 per barrel
and on track for its highest close in two weeks. U.S. oil
rose 98 cents to $88.11.
Spot gold was up 0.3 percent at $1,594.76 an ounce,
while U.S. gold futures for December delivery rose $7.10
an ounce at $1,597.80.
The precious metal is down nearly 2 percent this week, and
on track for its biggest weekly loss in six weeks, as demand
from key markets in Asia fades.