GLOBAL MARKETS-ECB's super stimulus salvo sends stocks, euro higher

* European rally pauses ahead of ECB meeting
* Dollar pulls out of recent dive
* Brent crude dips after tops $40 for first time since March

By Marc Jones
LONDON, June 4 (Reuters) - World markets got another shot of
energy on Thursday as the European Central Bank (ECB) ramped up
its Pandemic Emergency Purchase Programme (PEPP) to 1.35
trillion euros.
European equities .EU , oil O/R and euro markets /FRX
had been lower before the ECB said it would raise the programme
from 750 billion euros ($843 billion), extend it until June 2021
at the earliest and pledged to reinvest the proceeds until at
least the end of 2022. /FRX
This was beyond what most analysts had predicted and hot on
the heels of a huge domestic support package from Germany on
Wednesday hoisted the euro back above $1.1250 and
the main euro zone bourses back into positive territory. .EU
"This reflects the “we will do what it takes” mentality of
central bankers," said Neil Birrell, Chief Investment Officer at
Premier Miton, adding it was "likely to keep markets happy."
Italy led a fall in government bond yields with 10-year
borrowing costs tumbling more than 15 basis points to 1.40%
IT10YT=RR -- their lowest level since late March.
Safe-haven German 10-year bond yields eased away from their
highest since mid-April at -0.36% DE10YT=RR . The yield on the
benchmark U.S. Treasury 10-year US10YT=RR also drifted down
after a 6 bps rise on Wednesday to 0.77%.
This was the largest one day rise in rates since May 18, and
the highest closing level since April 14.
The euro's jump caused the dollar to wobble. It had risen
around 0.3% =USD against a basket of currencies before that
point and had looked on course for its first rise in a week.
Market optimism about the post-COVID 19 recovery has dented
the dollar's safe-haven appeal as have widespread protests in
the U.S. over the death of a black man in police custody.
The U.S. currency began strengthening in overnight trading
but picked up more sharply in Europe to push the Japanese yen to
a two-month low of 109.150. JPY=EBS.
Riskier currencies had fallen too. The Australian dollar
dropped as much as 0.5% to $0.6884 AUD=D3 after retail sales
there suffered a historic plunge, though the country's fourth
stimulus package had helped shares make more gains .AXJO .
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Hong Kong's stock market .HSI had still been hobbled by
concerns about Beijing's new national security law. Chinese
airline shares had also drooped after President Donald Trump's
administration had said it would bar Chinese passenger carriers
from flying to the United States from June 16. Oil prices, which have been on a tear in recent weeks, also
dipped as doubts about supply cuts by major producers began to
creep back in. O/R
Saudi Arabia and Russia, two of the world's biggest oil
producers, have agreed to support an extension into July of the
9.7 million barrels per day (bpd) supply cuts backed in April.
But they failed to agree on holding an OPEC+ meeting on
Thursday to discuss the cuts, with OPEC sources saying it would
be conditional a deepening of cuts by countries that have not
complied with their targets so far.
U.S. crude CLc1 fell as much as 2% to $36.53 a barrel,
while the ECB helped Brent crude LCOc1 temper falls. It was
last at $39.65 per barrel, having climbed above $40 a barrel for
the first time since early March on Wednesday.
Spot gold XAU= rose 0.25% to $1,701.28 an ounce early on
Thursday after losing 1.6% on Wednesday.
($1 = 0.8898 euros)

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