European stocks continued to rally in early trading Friday,
mirroring a sharp surge on Wall Street Thursday amid buying spurred
by the U.S. Federal Reserve's pledge to adopt a "patient" approach
when raising interest rates in 2015.
The Stoxx Europe 600--having already closed the previous session
almost 3% higher on the day--added another 0.6% shortly after the
open as individual country indexes rose across Europe.
In the U.S., the Dow Jones Industrials on Thursday enjoyed their
biggest two-day percentage gain in more than three years mainly
fueled by the Fed's rhetoric, but also--traders said--by
last-minute buying from hedge funds and other money managers whose
performances have flagged this year.
Economists said that especially in Europe, confidence that the
European Central Bank would announce a broadening of its asset
purchase program to include sovereign bonds early next year, was
buoying sentiment too.
In an interview with The Wall Street Journal earlier this week,
ECB executive board member Benoît Coeuré sent one of the clearest
signals to date that the ECB is poised to embark on large-scale
asset purchases early next year, as the bank grapples with a weak
economy and dangerously low inflation.
"The interview appears to make clear that it is not anymore a
question of whether but how the ECB will buy sovereign bonds," Beat
Siegenthaler, a currency strategist at UBS in Zurich said earlier
this week.
Earlier in the session, data showed that German consumer
sentiment has hit its highest level in eight years, on hopes
economic expansion in Europe's largest economy will accelerate in
the coming months.
In Russia on Friday, the ruble continued to recover from a
brutal selloff earlier this week but remained volatile.
It eased to 62.9 against the dollar in the first few minutes of
trading on the Moscow exchange but then recovered somewhat, edging
close to its Thursday closing level of 61.4.
Earlier this week the Russian finance ministry said it was ready
to sell as much as $7 billion to stabilize the ruble after the
central bank carried out massive monetary tightening, hiking its
key interest rate by 6.5 percentage points to 17%.
"The measures taken by Russian authorities to stem the ruble
slide and contain the turmoil in Russian markets, coupled with
perceptions of a dovish Fed, have sparked a turnaround over the
past few trading sessions, " Barclays economists wrote.
Nevertheless, the fate of the Russian economy is strongly linked to
the price of oil.
On Friday Brent crude was trading close to $60 a barrel, having
recovered somewhat from the 5 1/2 -year low of $58.50 hit earlier
this week. Year-to-date, though, the price of the commodity has
tumbled more than 45%.
Other currencies of economies dependent on oil, like the
Canadian dollar and the Norwegian krone, were broadly unchanged on
Friday. Nigeria's naira was also steady according to FactSet data,
but remains close to an all-time low against the U.S. dollar, after
the Nigerian central bank imposed new foreign-exchange controls on
Wednesday. The bank barred dealers from depositing their
currency-trading funds overnight, preventing them from placing bets
for or against a single currency at the close of a trading
session.
Finally Friday, the Bank of Japan announced that it is standing
pat on monetary policy, opting to gauge the effects of its expanded
stimulus campaign, despite a rapid fall in global oil prices that
threatens its efforts to generate 2% inflation. That sent the U.S.
dollar to one-week high against the yen of 119.47.
The buck was broadly steady against the euro at $1.2277.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires