ECB Loan Operations Boost Confidence in Markets, despite Worse than Expected U.S. Data

FXEmpire   |  September 15 2011 12:42 EDT

By FX Empire.com

Despite the worse than expected data from the United States, yet optimism spread around global markets after the European Central Bank announced three medium-term loan operations to provide European banks with dollars, which boosted confidence in markets, as traders targeted equity markets and higher yielding assets.

Moreover, Germany and France pledged to support Greece and assured markets Greece will remain in the euro bloc, in addition to assuring markets that Greece wont default on its debt, which also boosted confidence among traders.

Meanwhile, data from the U.S. manufacturing and labor sectors showed worsening activities, as the empire manufacturing index and the Philadelphia Fed index both showed contractions in September, while jobless claims rose above expectations, which signals that growth in the worlds largest economy remained weak through the third quarter of this year.

Stocks in the United States were higher by opening on Thursday, where the Dow Jones Industrial Average was up by nearly 0.80% to trade around 11,338, while the S&P 500 index was up by nearly 0.70% to trade around 1197. European stock indexes were higher before closing on Thursday, where FTSE 100 was up by 2.20% to trade at 5341 and the DAX was up by nearly 2.80% to trade around 5486.

The U.S. dollar fell sharply against a basket of major currencies on Thursday, where the U.S. dollar index was trading at 76.41, compared with the opening level at 76.97. The Euro extended its gains against the Dollar, where the EUR/USD pair traded around $1.3867, compared with the opening level at $1.3748, and the British Pound rose against the Dollar, where the GBP/USD pair traded around $1.5805, compared with the opening level at $1.5769.

Gold prices extended the losses on Thursday to trade now around $1775 an ounce, and crude oil prices gained to trade around $89 a barrel.