January 8, 2015 / 5:56 PM / 5 years ago

GLOBAL MARKETS-Stocks rally, dollar gains on central bank stances

* Stocks surge amid renewed investor confidence
    * Expectations grow for an ECB bond-buying program
    * Dollar index touches nine-year high
    * Brent oil falls below $51 a barrel

 (Adds close of European bond, stock markets)
    By Herbert Lash
    LONDON, Jan 8 (Reuters) - Global equity markets surged and
the dollar hit a nine-year high on Thursday, lifted by the
Federal Reserve's confidence in the U.S. economy and hopes of
aggressive new stimulus in Europe.
    Stocks on Wall Street rose about 1.6 percent and in Europe
equities jumped around 3 percent as investors' set aside fears
from a few days ago that the collapse in oil prices pointed to a
slowing global economy.
    Brent oil fell and U.S. crude see-sawed near break-even,
while prices for U.S. and German government debt fell on the
growing confidence the European Central Bank will launch a
bond-buying program to combat slowing economic growth.
    In the latest sign of a strong U.S. economy, the number of
Americans filing new claims for unemployment benefits fell last
week and job cuts declined sharply in December, suggesting a
tightening labor market. 
    In Europe, the president of the ECB said the bank's
Governing Council stands ready to take unconventional measures
if needed to stem a prolonged period of low inflation.
    The Fed appeared to firmly conclude that the U.S. recovery
was here to stay in minutes released Wednesday from its December
policy-setting meeting, despite a global deflation threat and
potential turmoil from plunging oil prices. 
    "The decline in the price in oil, sure it spoke volumes
about potential headwinds for the global economy," said Andrew
Wilkinson, chief market strategist at Interactive Brokers LLC in
Greenwich, Connecticut. "But it seems as ever investors are more
optimistic about the likely response from global central banks
and that turned confidence around."
    MSCI's all-country world stock index rose
1.91 percent, while the FTSEurofirst 300 index of top
European shares surged 2.87 percent to close at 1,368.37 points.
The German, French and Italian stock
market indexes each rose more than 3 percent.
    On Wall Street, the Dow Jones industrial average rose
282.54 points, or 1.61 percent, to 17,867.06. The S&P 500 
gained 32.89 points, or 1.62 percent, to 2,058.79 and the Nasdaq
Composite added 82.07 points, or 1.76 percent, to
    A slump in German industrial orders in November and a drop
in euro zone consumer inflation expectations reinforced bearish
views of the euro as the U.S. data also helped push the single
currency to a nine-year low, for a fifth day of losses. 
    The euro fell to $1.17540, its lowest since
December 2005, on the EBS trading platform, and last traded at
$1.1812, a decline of 0.21 percent. 
    The euro's weakness kept the dollar index at
nine-year highs. Against the yen, the dollar climbed to 119.52
    Oil fell below $51 a barrel as bulls and bears searched for
a floor to the prolonged rout.
    Brent crude fell 37 cents to $50.78 a barrel. U.S.
crude fell 4 cents to $48.61 a barrel.
    U.S. Treasury debt prices declined as Wall Street rallied
and oil prices steadied and on the expectations for an ECB
bond-buying program.
    Prices of benchmark 10-year Treasuries were off
18/32 to yield 2.0161 percent, after dipping below the 2 percent
level on Tuesday for the first time since October.
    "What's going on in Treasuries has nothing to do with what
is going on in the U.S. and everything to do with what is going
on in Europe and with what is going on in the energy complex,"
said Eric Green, head of U.S. rates and economic research at TD
Securities in New York.

 (Reporting by Herbert Lash; Editing by Leslie Adler)
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