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Home > Investments > Economic Indicators

Markets rally on ECB vow to do “whatever it takes”

Markets rally as the European Central Bank vows to do “whatever it takes” to protect the euro

By Rebecca Clancy | Published Jul 27, 2012 | comments

Markets have continued to rally this morning on the back of the European Central Bank’s (ECB’s) pledge to do “whatever it takes” to save the eurozone.

The FTSE 100 index of leading UK shares has gained another 0.2 per cent in early trading, after making gains of 1.4 per cent yesterday.

The FTSEurofirst 300 index of European shares was up 0.3 per cent in early trading after jumping 2.4 per cent on Thursday.

The news was also well received globally, with the S&P 500 closing last night up 1.7 per cent.

The bullish mood among investors comes after ECB president Mario Draghi, speaking in London yesterday (July 26), vowed to do “whatever it takes” within the scope of the bank’s mandate.

“Believe me, it will be enough,” he said.

The comments, which come ahead of the bank’s policy-setting meeting next week, have led analysts to forecast that the ECB will begin its sovereign bond-buying scheme, in line with the UK’s recent expansion of its asset purchasing programme.

The view has helped bring Spanish bond yields to step back from the brink, with 10-year sovereign yields falling back below the 7 per cent barrier - seen as an unsustainable level - to hit 6.8, down from the euro-era high of 7.62 seen on Tuesday (July 24).

Buyers of Italian bonds also welcomed the news, with 10-year government bonds falling 1.4 per cent this morning to 5.9, from a high of 6.6 earlier in the week.

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