March 7, 2021

Asian and European Markets Rally on Central Banks’ Actions

HONG KONG — Stock markets in Europe and Asia rose Friday, continuing a rally that had lifted markets in the United States the previous day, as investors took comfort from efforts by the world’s leading central banks to bolster liquidity in the European banking system. On Wall Street, futures for the major indexes indicated a slight decline at the opening of trading.

The European Central Bank and its counterparts in the United States, Britain, Japan and Switzerland opened new lines of credit to European banks, allowing them to borrow dollars for as long as three months, a period that gives them breathing space for the rest of this year.

Analysts cautioned that the step, while providing welcome relief to a range of beleaguered financial institutions, was no panacea for the underlying problem, the crippling debt levels that are weighing on several euro zone countries and threatening to push the hardest-hit among them, Greece, into default.

“It’s an important and gratifying but small step in the right direction,” Andrew Pease, chief investment strategist for Asia Pacific at Russell Investments, said in a conference call Friday.

But he added that ultimately, more concerted moves were needed toward a more fiscally united Europe.

“Things will likely need to get worse,” he said, before the necessary decisions to “clear the air” would be taken.

Still, investors around the world appeared to greet the announcement with a renewed interest in purchasing stocks.

The euro was trading at about $1.385, having firmed markedly against the dollar Thursday.

In Europe, the DAX climbed 1.9 percent, and the CAC 40 in France advanced 1 percent.

In Japan, the Nikkei 225 index closed 2.3 percent higher. The Kospi in South Korea climbed 3.7 percent, and the benchmark index in Australia finished up 1.9 percent.

The Hang Seng index rose 1.4 percent in Hong Kong. In India, where the central bank nudged interest rates up again Friday in a battle against inflation, the Sensex closed 0.3 percent higher.

Meanwhile, a meeting of European finance ministers and other policy makers in the Polish city of Wroclaw on Friday and Saturday fanned expectations of potentially more determined action to contain the growing sovereign debt crisis.

The United States Treasury secretary, Timothy F. Geithner, was also attending, a sign of how strong the sense of urgency surrounding the euro zone debt crisis had become, analysts said.

A meeting of the Federal Reserve of the United States next week will also be closely watched, amid expectations that the bank may signal new measures for the lumbering American economy.

“The Fed is under pressure to come up with some sort of additional stimulus. It is also under pressure not to do so,” analysts at the financial services group DBS wrote in a research note published Friday, highlighting the complex pressures facing the American central bank and the internal debate about how best to act. “Still, we expect the Fed will do something, mainly because that’s the Fed’s job. You can’t just say ‘we’re out of ideas’ and walk away.”

Jack Ewing contributed reporting from Frankfurt.

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