ECB Announcement Leads to Massive Rally

THURSDAY MARKET UPDATE: The announcement of a new ECB bond-buying programme gave a big boost to global markets

Alanna Petroff 6 September, 2012 | 6:41PM Jeremy Glaser

Global stock markets soared on Thursday after the announcement of a new European Central Bank (ECB) bond-buying programme.

As was broadly expected, ECB president Mario Draghi announced a plan to purchase sovereign bonds with maturities of one to three years in an effort to bring down borrowing costs for beleaguered eurozone members. The programme will only apply to bonds from countries that have accepted some form of bailout from the European Financial Stability Facility (or the future European Stability Mechanism) and that are in compliance with the terms of the bailout. The ECB has also agreed to be treated the same as private creditors if a bond restructuring is necessary.

The FTSE 100 index reacted by posting a triple-digit rally, rising by 119 points, or 2.1%. The benchmark index is now closed at 5,777. Financials and mining companies were the main risers on the large-cap index, with Evraz (EVR) shooting up by just over 7%. Shares in Lloyds Banking Group (LLOY) also spiked by nearly 7%. 

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About Author

Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.

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