The Standard Poor’s 500-stock index closed up 1.8 percent, while the Dow Jones industrial average gained 1.7 percent. The Nasdaq composite index was 1.9 percent higher.
Weekly jobless claims in the United States rose to 401,000, from a revised level of 395,000 last week. The four-week moving average was 414,000, which was lower than the previous month and slightly better than analysts’ expectations.
But the action was mostly in Europe. The central bank moved to help European banks that are having trouble raising short-term cash, while the Bank of England decided to resume its bond purchases to help support a slowing British economy. Both central banks left their key benchmark rates unchanged, at 1.5 percent for the euro area covered by the European Central Bank and 0.5 percent for Britain.
While most economists did not expect the E.C.B. to cut rates, some said they were disappointed with the bank’s actions, particularly because this was the last policy meeting to be headed by Jean-Claude Trichet, who will be replaced by Mario Draghi, governor of the Bank of Italy, on Nov. 1. Mr. Draghi will face pressure not to cut rates immediately in order to establish his credentials as an inflation fighter, analysts said.
But the Bank of England’s resumption of its bond buying program was a surprise, said Mark McCormick, a currency strategist at Brown Brothers Harriman, a boutique banking firm in New York.
“Bank of England exceeded the markets’ expectations, the E.C.B., I would say, disappointed. But they’re both trying to ease financial conditions and in turn support economic growth from a monetary perspective,” he said.
French lenders posted solid gains, leading European indexes upward, after the financial daily Le Figaro reported that the French government was prepared to act to help “two or three banks.” The Figaro report did not identify the source of its information, and news agencies cited French officials as denying that such a plan was in the cards.
BNP Paribas rose 7.5 percent, Société Générale rose 3.16 percent and Crédit Agricole gained 3 percent. Dexia, the failing bank that the French and Belgian governments this week said they would guarantee, began the day higher but by afternoon was 17.2 percent lower.
The Euro Stoxx 50 index, a barometer of euro zone blue chips, closed up 3.2 percent, while the FTSE 100 index in London rose 3.7 percent. The DAX in Frankfurt gained 3.2 percent and the CAC 40 in Paris increased 3.4 percent.
Longer term, however, the picture remained as murky as ever, and financial markets continued to face what strategists at HSBC, in their latest quarterly assessment, called “an unbearable degree of uncertainty.”
“After falling 22 percent from their April highs, global equities are likely to remain tricky,” Garry Evans, head of global equity strategy at HSBC in Hong Kong, wrote. “There are few signs of a bold solution to Europe’s sovereign debt issues, and the 23 November deadline for U.S. debt negotiations looms.”
Moreover, he added, economic growth prospects have not bottomed. Although the jury is still out on whether the world will actually tip into another recession, markets will continue to fret that it might, he said.
Asian shares rallied. The Tokyo benchmark Nikkei 225 stock average rose 1.66 percent. In Hong Kong, the Hang Seng index rose 5.67 percent.
Crude oil futures for November delivery rose .57 percent to $80.20 a barrel. Comex gold futures slipped 0.2 percent to $1,637.60 an ounce.
The dollar was mixed against other major currencies. The euro rose to $1.3384 from $1.3348 late Wednesday in New York, while the British pound rose to $1.5697 from $1.5460. The dollar rose to 76.86 yen from 76.79 yen, but fell to 0.9225 Swiss francs from 0.9232 francs.
Yields on the government bonds that investors see as the safest assets rose, as money flowed into stocks. The yield on the 10-year United States Treasury rose 5 basis points to 1.958 percent, while the yield on the comparable German security rose 5 basis points to 1.88 percent.
David Jolly reported from Paris. Bettina Wassener contributed from Hong Kong.
Article source: http://www.nytimes.com/2011/10/07/business/daily-stock-market-activity.html?partner=rss&emc=rss
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