Better-than-anticipated economic data in China, Europe and
the United States also whetted investors' appetite for risk globally, driving
major US and European stock indexes up more than 2 percent.
Portuguese debt costs fell along with those of other
peripheral euro-zone countries as some investors bet the ECB will take further
action at its meeting on Thursday.
Portugal was also able to sell 500 million euros in 12-month
T-bills but, in a sign of sagging investor confidence in the country, yields
paid on the debt rose to a euro lifetime record of 5.281 percent, from 4.813
percent two weeks ago.
The euro jumped 1.1 percent and traded above $1.31, also
boosted by news that the United States would be ready to support the extension
of the European Financial Stability Facility via additional commitment of cash
from the International Monetary Fund.
"The market's been caught short on euros. Periphery
yield spreads have tightened somewhat, and the market is pricing in the
possibility that the ECB won't be too aggressive tomorrow," said Geoffrey
Yu, currency strategist at UBS.
Some analysts warned, however, that the rebound of the
European single currency seemed to be just temporary.
"I think this is just caution ahead of the ECB meeting
tomorrow," said Vassili Serebriakov, senior currency strategist at Wells
Fargo in New York. "If anything, this is a very tentative bounce until we
hear from the ECB tomorrow."
Others said dramatic action after the ECB policy meeting on
Thursday was unlikely, but that the spreading euro-zone debt crisis demanded
radical measures at some point.
Appetite for risky assets also got a boost from
better-than-expected Chinese factory data in November, which showed one of the
world's largest economic engines was in good health.
In Europe, the euro zone's manufacturing sector expanded at
its fastest pace in four months in November, led by heavyweights Germany and
France. Britain's manufacturing hit a 16-year high.
US private-sector payrolls also registered their biggest
rise in three years in November, ADP Employer Services said, lifting optimism
about the job market ahead of Friday's key government employment report.
The MSCI All-Country World Index climbed 2.1 percent after
three consecutive sessions of losses.
The Dow Jones Industrial Average rose 244.42 points, or 2.22
percent, to 11,250.44, while the Standard & Poor's 500 Index jumped 25.02
points, or 2.12 percent, to 1,205.57. The Nasdaq Composite Index shot up 56.59
points, or 2.27 percent, to 2,554.82.
In Europe, the FTSEurofirst 300 rose 2.06 percent, its
biggest one-day gain in three months, to finish at 1,089.16. Shares of miners
led the market higher after the strong factory output data from top metals
consumer China.
Emerging market stocks measured by a MSCI benchmark index
jumped 2.2 percent.
The positive economic data also encouraged investors to step
out of the safe-haven dollar and Treasuries.
The US dollar slid 0.66 percent against a basket of major
currencies, according to the US Dollar Index.
The benchmark 10-year US Treasury note lost more than 1
point in price, boosting its yield to 2.942 percent from 2.8 percent late Tuesday.
Commodities also posted gains. US crude for January delivery
gained $2.21, or 2.6 percent, to $86.32 a barrel by 12:35 p.m. EDT (1735 GMT)
having surged to $86.47 earlier, the highest since Nov. 12. It rebounded from a
2 percent slide on Tuesday.
ICE Brent crude rose $2.35, or 2.7 percent, to $88.27.
The spot price of gold edged up 0.5 percent to $1,391.40 an
ounce.
