NEW YORK (Reuters) - U.S. and European stock prices rose on Wednesday on hopes the European Central Bank would embark on more stimulus soon to avert deflation in the euro zone, while oil prices showed no sign of rebounding from their lowest levels since 2009.
Crude oil prices have fallen 50 percent since mid-2014, tipping monthly euro zone inflation into negative territory for the first time since 2009. The European statistics office estimated that prices were down 0.2 percent in December from a year earlier.
As a result, investors are growing more hopeful that the ECB might roll out a bond-buying program to prevent a downward price spiral. Those expectations have helped knock the euro to a nine-year low and bond yields in several euro zone members to record lows.
“The deflationary data suggested the ECB will be justified in doing more and that is probably what people are betting on right now,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
The FTSEurofirst 300 index of top European shares .FTEU3 jumped as much as 1 percent after three losing sessions. It closed up 0.5 percent at 1,330.20 points.
The rebound in European shares, together with positive jobs and trade data, revived Wall Street with the Standard & Poor’s 500 snapping a five-day losing streak, the longest in about 13 months.
The Dow Jones industrial average .DJI ended up 211.79 points, or 1.22 percent, to 17,583.43, the S&P 500 .SPX closed up 23.24 points, or 1.16 percent, to 2,025.85 and the Nasdaq Composite .IXIC finished up 57.73 points, or 1.26 percent, to 4,650.47. [.N]
Tokyo's Nikkei .N225 ended flat at 16,885.33. [.T]
The MSCI world equity index .MIWD00000PUS, which tracks shares in 45 nations, rose 0.61 percent, to 406.51.
The ECB meets on Jan. 22 but may be reluctant to act aggressively before Greece’s general election on Jan. 25. There has been speculation that the country might move to exit the euro zone if the left-wing Syriza party wins.
The oil market remained depressed. Brent crude LCOc1 slid more than 2 percent early, dipping below $50 a barrel for the first time since early 2009 before bouncing up to just over $51.
It finished up 5 cents or 0.1 percent at $51.15 a barrel, while U.S. crude futures CLc1 settled up 72 cents or 1.50 percent at $48.65. [O/R]
The euro fell as low as $1.18085 EUR=EBS, the lowest since 2009. It last traded at $1.1842, down 0.4 percent on the day on the EBS trading system. [FRX/]
The dollar also rose against the yen, rebounding from early losses. It was last up 0.6 percent at 119.13 yen JPY=EBS, which was about 2.7 yen below a seven-year peak set in December.
The greenback, like stocks, climbed on encouraging data on U.S. trade and private job growth and an initial rise in U.S. yields.
U.S. 10-year Treasury note yields US10YT=RR briefly touched 2 percent earlier Wednesday with the gains in stocks. They turned flat on the day after the Federal Reserve released minutes on its Dec 16-17 policy meeting, which traders reckonedshowed it was in no hurry to raise interest rates.
Thirty-year U.S. yields were little changed at 2.521 percent US30YT=RR, holding above an all-time trough of 2.443 percent hit on Tuesday. [US/]
Longer-term borrowing costs reached record lows in Germany, France, the Netherlands, Austria, Belgium, Finland as well as in Japan, Canada and Australia. [GVD/EUR]
Yields on German bonds of maturities of up to five years were negative and the 10-year yield DE10YT=TWEB touched as low as 0.433 percent.
Additional reporting by Rodrigo Campos and Caroline Valetkevitch in New York; Jamie McGeever in London; Editing by Anna Willard, James Dalgleish, David Gregorio and Christian Plumb