Sabato, 22 Settembre 2018
ROME

ECB bond-buying plan boosts financial markets

English
© ANSA

(ANSA) - Rome, September 6 - European stock markets rallied
Thursday and Milan's FTSE MIB jumped by more than 4% after the
European Central Bank announced a much-anticipated bond-buying
plan.
In Milan, the FTSE MIB gained 4.31% to reach 15,780 while
the FTSE Italia All-Share index jumped by 3.98% to close at
16,631 points, in reaction to the plan announced by ECB
President Mario Draghi to ease funding pressures on troubled
governments.
The spread between Italian and German bonds narrowed
throughout the day as financial markets cheered the bond-buying
plan designed to lower borrowing costs for states such as Italy
and Spain.
The program provides a "backstop" that will allow the
central bank to deal with market distortions driven by fear,
Draghi told a news conference.
His words had a quick and dramatic effect on markets.
As he spoke, the spread between Italy's 10-year bond and
the German Bund - a reflection of investor confidence - fell to
378 basis points with the yield of 5.33%.
By the end of the European trading day, the spread had slid
to 370 points, with a yield of 5.26% on 10-year Italian paper.
At some of Italy's worst moments in the current sovereign
debt crisis, the spread had topped 500 basis points.
Draghi said ECB policy-makers agreed on an unlimited
bond-purchase program in order to better manage interest rates
in the euro area and provide some protection for the common
currency by countering financial-market speculation about the
euro's future.
"Under appropriate conditions, we will have a fully
effective backstop to avoid destructive scenarios," he said.
The "appropriate conditions" clause tells governments in
troubled countries, including Italy and Spain, that they must
request assistance under the program and live with whatever
stringent conditions may be imposed.
Buoyed by the new program, Madrid's IBEX jumped by 4.91% to
close at 7, 862 points Thursday while London's FTSE-100 index
gained 2.11% to 5,777.34 points.
Similarly, Paris's CAC 40 index rose by 3.06% to close at
3,509.88, while Frankfurt's DAX index gained 2.91 to close at
7,167.33.

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