ECB's bond-buy plan lifts shares, U.S. payrolls eyed

LONDON (Reuters) - Stock markets worldwide gained on Friday, and yields on peripheral euro zone government debt fell as investors welcomed the European Central Bank's latest bond-buying plan and positioned for a potentially strong U.S. jobs report.

Expectations of a big rise in U.S. nonfarm payroll numbers, due out at 1230 GMT, have grown since data on private-sector employment on Thursday showed robust growth for last month.

But the markets' main driver is still the ECB's new and potentially unlimited bond buying plan, which it is hoped will lower the borrowing costs for indebted nations like Spain and Italy and ease fears over the future of the euro.

The broad FTSEurofirst 300 index <.fteu3> of top European companies, which jumped 2.6 percent on Thursday when the ECB announced the plan, has gained a more modest 0.3 percent to 1,107.73 points in early trade.

"I am positive on the market in the near term. You have got the policy response coming through, valuations are still OK, and the macroeconomic backdrop isn't all that bad. These three things add to the momentum in the market," said Graham Bishop, equity strategist at Exane BNP Paribas.

Reaction to the ECB program had earlier sent U.S. stocks to multi-year highs <.n>, with the widely watched S&P 500 index <.spx> back to its levels of May 2008 when the financial crisis was still gathering pace.

U.S. stock index futures are pointing to further gains when Wall Street opens later.

Asian shares outside Japan <.miapj0000pus> posted their biggest daily gain in six weeks on Friday. They had gained an extra boost from a jump in Chinese stocks after authorities approved 60 new infrastructure projects this week in a bid to bolster growth.

All the equity rallies have lifted the MSCI's world equity index <.miwd00000pus> nearly 2.5 percent over the past 24 hours, back to levels last seen in early May, when demand was still being supported by the ECB's last big policy move - an injection of cheap three-year funds into the banking system.

IMPLEMENTATION RISK

The single currency has seen a more muted but still positive response to ECB President Mario Draghi's latest measures, which came in the face of opposition by Germany's Bundesbank and can't take effect until a nation in trouble requests help.

The euro was up 0.4 percent at $1.2686, its highest level since early July before Draghi made his dramatic pledge to do everything possible to save the euro.

The single currency was also at a two-month high against the safe-haven yen of 100.15 yen and a one-month peak versus the Swiss currency at 1.21384 Swiss francs.

"Draghi has lowered the risk premium towards the euro," said George Saravelos, G10 FX strategist at Deutsche Bank. "We expect the euro to rise above $1.27 in the near term."

There were few doubts about the effect of the plan in the euro zone debt markets, where Spanish 10-year government bond yields fell 29 basis points to 5.78 percent - the first time they have been below 6 percent since May.

Equivalent Italian bonds were down 20 basis points at 5.12 percent.

U.S. Treasury bond yields meanwhile were edging higher, extending their sharp rise from the previous day as market attention switched to an anticipated strong U.S. employment report, which would lower the prospect of a further Federal Reserve easing.

The private-sector employment report on Thursday showed that U.S. employers had added 201,000 jobs in August, easily beating economists' expectations for 140,000 new private sector jobs.

The numbers have seen some analysts revise expectations for the key August non-farm payrolls report above the current median forecasts of economists surveyed by Reuters, which calls for a rise of 125,000 jobs.

The prospect of strong payroll number and the impact that would have on hopes for more Fed stimulus measures rippled through commodity markets on Friday.

Gold, which usually gains from any sign of central banks printing more cash, fell about half a percent to $1,692.86 an ounce, compared with Thursday's high of $1,712.91.

Brent crude oil was steady above $113 a barrel, with the jobs data also seen key to a decision on whether the United States would consider another emergency release of oil reserves.

Brent crude futures were 13 cents higher at $113.61 a barrel, and U.S. crude was down 7 cents at $95.46.

(Additional reporting by Anirban Nag and Atul Prakash; Editing by Will Waterman)

Source: http://news.yahoo.com/asia-shares-rise-ecb-focus-payrolls-002916019--finance.html

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