Euro-dollar parity: It's now in Yellen's hands

The euro rose for the first time in two weeks on Thursday, trading at around $ 1.0585, and bouncing off the previous day’s 12-year lows. It has fallen fast and furious in recent weeks against a backdrop of monetary stimulus in the euro zone and expectations of monetary tightening from the Fed this year.

Fast and furious

The euro has shed 6.5 percent against the dollar in the past 30 days and even with Thursday’s rebound, the currency is down more than 4 percent over the past week.

It’s that fall that has raised expectations for a move to parity against the dollar, something that last happened in 2002.

Read MoreDollar-euro parity: What a one-to-one exchange means

And what role does the Fed play in this parity debate? Well, say analysts, if Yellen removes the key phrase “patient” from the Fed’s statement, this would be interpreted by markets as signal that a June rate hike is on the cards.

A rate rise would increase the yield differential between the dollar and the euro – pulling the single currency lower. On the other hand, if the Fed continues to express patience about the economic outlook, the dollar could give up some of its recent gains.

“If they [Fed policymakers] remove the word patience from their statement, it’s [euro/dollar] going to go to parity very quickly,” Kelvin Tay, managing director and regional chief investment officer, Southern APAC at UBS Wealth Management said on CNBC Asia’s”Street Signs.” “If you look at the momentum the U.S. dollar has going for it at the right now, it’s quite scary.”

Euro Falls as Italy Bonds Gain; S&P 500 Futures Drop

(Bloomberg) — The euro weakened while Spanish and Italian bonds gained as a gauge of business activity grew less than estimated before the European Central Bank meets to work on details of its bond-buying program. European stocks erased gains and U.S. equity-index futures fell.

Europe’s shared currency slid 0.4 percent to $ 1.1129 at 10:14 a.m. in London. The yield on 10-year Spanish notes fell two basis points to 1.37 percent and Italy’s rate dropped to 1.38 percent. U.K. 10-year yields rose to the highest this year. The Stoxx Europe 600 Index slipped less than 0.1 percent and Standard & Poor’s 500 Index futures declined 0.3 percent.

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While a purchasing managers index for the manufacturing and services industries in the euro area rose to a seven month high, it was less than initially estimated, according to Markit Economics. Investors are looking for Thursday’s ECB meeting for details on its 1.1 trillion-euro ($ 1.2 trillion) quantitative-easing program announced in January.

“It’s worth noting that the market may want to increase their short-euro exposure ahead of the ECB actually starting their QE program,” said Sam Lynton-Brown, a currency strategist at BNP Paribas SA in London. “While the announcement led to euro weakness, we also think the flow impact of QE is going to be very important.”

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U.S. Jobs

Global equities have added almost $ 5 trillion of market value during the past six months amid a wave of monetary easing and signs of strength in the U.S. economy. A private jobs report from the ADP Research Institute will probably show U.S. companies added more workers to payrolls in February, while the Institute for Supply Management’s non-manufacturing index slipped.

The euro fell against all but one of its 16 major peers. It declined 0.6 percent to 133.04 yen, and fell to a record against New Zealand’s dollar.

Portugal’s bonds rose with Spain’s and Italy’s. The yield on 10-year securities declined five basis points to 1.88 percent, approaching the record 1.739 percent set on Monday.

German 10-year bonds were little changed, with the yield at 0.36 percent. The rate on 10-year gilts increased two basis points to 1.86 percent and touched 1.88 percent, the highest since Dec. 29.

Standard Chartered Plc gained 5.2 percent after saying capital will rise enough to leave the dividend unchanged even after a drop in full-year profit. Total SA advanced 1 percent. ITV Plc added 4.4 percent after saying it plans a special dividend.

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Henkel Profit

Henkel AG fell 4.2 percent. The maker of Persil detergent reported fourth-quarter profit that missed analyst predictions as the ruble’s drop held back growth in Russia. It forecast further burdens there this year. Elekta AB slid 9.2 percent as quarterly profit missed projections.

Russia’s Micex slipped 0.8 percent, falling for the first time in three days, and the ruble was little changed. Russia’s services activity shrank for a fifth consecutive month in February, at its fastest rate of decline since March 2009 as demand weakened. A report later this week will probably show inflation climbed to a 13-year high of 16.7 percent.

Ukraine’s hryvnia strengthened 8.1 percent, extending a 9.3 percent advance yesterday. The National Bank of Ukraine raised its refinancing rate to 30 percent from 19.5 percent, effective Wednesday, to “stabilize the situation on the money and lending markets,” Governor Valeriya Gontareva told reporters in Kiev. That’s the highest benchmark among all countries tracked by Bloomberg.

The Shanghai Composite Index added 0.6 percent while the Hang Seng China Enterprises Index lost 1.6 percent. as Bank of China Ltd. slid to a three-week low.

China Growth

The Services Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics climbed to 52 last month from January’s 51.8. Premier Li Keqiang is expected to announce a 2015 economic growth goal of about 7 percent on Thursday, when the National People’s Congress starts its annual meeting, down from last year’s 7.5 percent.

Oil rose 0.6 percent and traded above $ 50 a barrel. Saudi Arabia increased the pricing terms for its Arab Light grade to Asia by the most in three years after the kingdom’s oil minister said last month that demand is growing. U.S. stockpiles probably expanded by 3.95 million barrels last week, according to a Bloomberg News survey before an Energy Information Administration report Wednesday.

Copper for delivery in three months on the London Metal Exchange slid 0.4 percent. Gold and silver for immediate delivery were little changed.

To contact the reporters on this story: Emma O’Brien in Wellington at [email protected]; Stephen Kirkland in London at [email protected]

To contact the editors responsible for this story: Stephen Kirkland at [email protected]; Stuart Wallace at [email protected] Stuart Wallace

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Euro Bounce on PMIs Unlikely to Last, US Dollar at Risk on CPI Drop

DailyFX.com –

Talking Points:

  • Euro Gains on Pickup in PMI Readings Unlikely to Yield Follow-Through
  • US Dollar Vulnerable if Soft CPI Print Undercuts Fed Rate Hike Outlook
  • Yen Drops Alongside Japanese Yields, Aussie Down on Weak China PMI

The preliminary set of November’s Eurozone PMI figures headlines the economic calendar in European trading hours. The region-wide composite gauge is forecast to show manufacturing- and service-sector activity growth narrowly accelerated for a second consecutive month. An upbeat result may offer a short-lived boost to the Euro but follow-through seems unlikely considering the inability of such outcomes to meaningfully alter the ECB’s decidedly dovish posture.

Later in the day, the spotlight turns to October’s US CPI report. The benchmark year-on-year inflation rate is seen edging lower to 1.6 percent, the lowest in seven months. Investors may interpret a weak result as suggesting that the Fed will be relatively slow to issue its first post-QE interest rate hike, punishing the US Dollar.

The Japanese Yen underperformed in overnight trade, sliding as much as 0.6 percent on average against its leading counterparts. The move tracked a drop in Japan’s benchmark 10-year bond yield, hinting the selloff reflected bets on increasingly accommodative monetary policy after GDP figures released earlier in the week showed the world’s third-largest economy has sunk back into recession.

The Australian Dollar likewise faced selling pressure after the HSBC Chinese Manufacturing PMI gauge proved disappointing, showing factory-sector activity unexpectedly stalled in November. The East Asian giant is Australia’s top export market, meaning a slowdown there translates into an ebbing outlook for cross-border sales that bears down on overall economic growth and RBA monetary policy projections.

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Critical Levels

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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ECM launches 750 million euro European infrastructure debt fund

By Claire Ruckin and Jack Aldane

LONDON (Reuters) – Wells Fargo-owned ECM Asset Management (ECM) has launched a 750 million euro (600.14 million pounds) European infrastructure debt fund, ECM announced on Wednesday.

The fund will invest its parallel euro and sterling vehicles in senior debt for high value/low risk assets across infrastructure projects and utilities in continental Europe and the UK, on a buy-and-hold basis.

ECM has teamed up with Santander in order to secure strong deal flow, giving it access to a large number of diverse transactions in Europe and the UK on a first right of refusal basis.

ECM said it had entered into a strategic partnership with a leading European player but declined to comment on it being Santander. Santander was not immediately available to comment.

The fund will mainly focus in floating rate debt, with an ability to invest up to 20 percent in fixed rate debt across the renewable energy, social infrastructure, transport, power, oil and gas, telecoms and utilities sectors.

“With government funding reduced globally and banks’ appetite for long term lending structurally diminished by Basel III new capital and liquidity rules, funding is evolving as these traditional sources decrease. This is a great time therefore to take advantage of the sizeable supply and demand gap present in this space,” said Nicola Beretta Covacivich, ECM Head of infrastructure finance.

The fund is structured as a closed-ended English limited partnership and is due to have a first close by the end of the first quarter in 2015.

ECM manages $ 8 billion of European fixed income credit assets across a number of credit asset classes including investment grade, high yield corporate bonds, asset backed securities, bank capital, senior secured loans, high yield, European emerging market debt and Infrastructure debt.

(Editing by Christopher Mangham)

Lithuania Selling 12-Year Eurobonds as Yields Near Record Lows

Lithuania sold 1 billion euros ($ 1.27 billion) of bonds at record-low yields after the European Union backed the Baltic nation’s plan to adopt the common currency on Jan. 1.

The 12-year notes, the nation’s longest-ever maturity, were priced to yield 100 basis points above the benchmark swap rate, the Vilnius-based Finance Ministry said in an e-mailed statement today. Lithuania last raised 500 million euros in 10-year bonds in January at 135 basis points above mid-swaps.

The nation, set to become the 19th to switch to the euro, is tapping international markets to help refinance $ 1.5 billion of 6.75 percent five-year bonds due Jan. 15. The yield on the 2024 debt rose four basis points to 1.83 percent at 5:20 p.m. in Vilnius, nine basis points from the Oct. 15 record low, according to data complied by Bloomberg.

“We still have over two months to go before our euro-zone membership, yet the benefits of the euro in reducing borrowing costs are already felt,” Finance Minister Rimantas Sadzius said in an e-mailed statement today. Lithuania is “already being priced in as a euro-area country” by investors, he said.

The nation of 2.9 million “is using the favorable mood with euro introduction and record-low 10-year yields,” said Lutz Roehmeyer, who helps oversee $ 1.1 billion of debt in emerging markets at Berlin-based Landesbank Berlin AG. “Emerging-market investors will pass because of the low yield. Now, euro-zone investors have to fill the gap and should start buying.”

S&P Upgrade

Standard & Poor’s and Fitch Ratings upgraded Lithuanian debt as it progressed toward euro adoption. S&P lifted its rating two levels to A-, the fourth-lowest investment grade, in April. Fitch Ratings in June upgraded it to A-, saying “euro adoption will enhance Lithuania’s economic policy coherence and credibility.”

Moody’s changed the outlook on its Baa1 ranking, three levels away from junk, to positive from stable. The company said euro adoption would eliminate exchange-rate risk and government finances continue to improve.

The Finance Ministry cut its 2015 economic-growth forecast to 3.4 percent from 4.3 percent, citing sluggish EU export markets and curbs on trade with Russia.

HSBC Holdings Plc, JPMorgan Chase & Co. and Societe Generale SA managed the sale.

To contact the reporters on this story: Lyubov Pronina in London at [email protected]; Milda Seputyte in Vilnius at [email protected]

To contact the editors responsible for this story: Balazs Penz at [email protected]; Daliah Merzaban at [email protected] Chris Kirkham, Zahra Hankir

Euro May Be Asymetrically Sensitive if PMI Data Tops Expectations

DailyFX.com –

Talking Points:

  • Euro May Prove Most Responsive to Better-Than-Expected Sep. PMI Results
  • Aussie Dollar Outperformed Following Upbeat Chinese PMI Print Overnight
  • NZ Dollar Sold on Fading RBNZ Rate Hike Bets, Dairy Exports Expectations

September’s preliminary set of Eurozone PMI figures headlines the economic calendar in European trading hours. The regional composite index is expected to show that the pace of manufacturing- and service-sector growth remained unchanged this time around after sliding to an eight-month low in August. A print in line or worse than expected seems unlikely to generate significant Euro volatility.

The ECB has already introduced an aggressive array of stimulus easing measures, meaning further evidence speaking to weakness in the region is unlikely to materially upset the established status quo and spur capital flows. On the other hand, anoteworthy improvement may fuel upside volatility amid an unwinding of formidably built-up speculative short positions.

The Australian Dollar outperformed in overnight trade, rising as much as 0.2 percent on average against its leading counterparts. The move followed better-than-expected Chinese Manufacturing PMI data from HSBC that showed the pace of growth in factory-sector activity unexpectedly accelerated in September. China is Australia’s largest trading partner and traders often interpret signs of improvement there as positive for the latter country’s business cycle, which in turn underpins supportive RBA policy bets.

The New Zealand Dollar proved weakest on the session, falling as much as 0.2 percent against the majors. The move tracked a drop in New Zealand’s benchmark 10-year bond yield, pointing to eroding RBNZ rate hike expectations as the catalyst behind the selloff. Downward pressure may have been compounded by a report from Rabobank that showed 47 percent of polled dairy farmers expected business performance to deteriorate in the coming 12 months. Dairy is New Zealand’s largest export sector and a drop-off there bodes ill for the economy as a whole, which may in turn limit the scope of future monetary tightening.

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Asia Session

European Session

Critical Levels

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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Contact and follow Ilya on Twitter: @IlyaSpivak

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Euro Faces Volatility as External Factors Compound Onset of TLTRO

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Euro Faces Volatility as External Factors Compound Onset of TLTRO

Fundamental Forecast for Euro: Neutral

  • Euro May Bounce on Strong Demand at First ECB TLTRO Operation
  • FOMC Announcement, Scotland Referendum May Stoke Euro Volatility
  • Help Identify Critical Turning Points for EUR/USD with DailyFX SSI

Euro selling pressure appears to be waning at last after eight consecutive weeks of losses that brought the single currency to the lowest level in 14 months against the US Dollar. The operative question going forward is whether this precedes a period of consolidation before a reinvigorated push downward or a correction upward. The answer will be found in the markets’ response to a hefty dose of high-profile event risk on the domestic and the external fronts in the week ahead.

Looking inward, thespotlight is on the first ECB TLTRO operation due to be held on September 18. The effort represents one of many easing tools that Mario Draghi and company have deployed in recent months in an attempt to check the slide toward deflation and repair the seemingly broken monetary policy transmission mechanism that has made the central bank’s prior attempts at stimulus largely ineffective. The scheme envisions offering Eurozone banks cheap capital tied up with conditions pushing them re-lend it while passing on low borrowing costs to the real economy, stoking activity and boosting prices.

The key variable in play will be the size of the liquidity provision that is ultimately taken up by banks tapping the facility. In a somewhat counter-intuitive turn of events, a large capital allocation seems likely to offer support to the Euro. The ECB has seemingly done everything it could muster in terms of expanding accommodative monetary policy without embarking on “classic” QE: the purchase of sovereign debt with newly minted money. Indeed, the TLTRO effort will be aided by a record-low baseline lending rate, a negative deposit rate, as well as purchases of asset-backed securities and covered bonds.

With that in mind, strong uptake on the TLTRO operation may be seen as giving policymakers a bit of breathing room to shift into wait-and-see mode without feeling pressure to do more, a move that could prove functionally difficult given strong opposition from the likes of Germany and undermine the ECB’s credibility. That may in turn fuel speculation that single currency has fallen substantially enough to price in the degree of easing already on the table, prompting a round of profit-taking on highly elevated speculative short positions and sending the common unit upward.

Externally, the first major item of note is the FOMC policy announcement. September’s outing will be accompanied by the release of an updated set of forecasts for key metrics of US economic activity as well as press conference from Chair Janet Yellen. The Fed has long warned about complacently buoyant risk appetite as the end of QE3 looms ahead next month. If policymakers opt to shake things loose with upbeat activity projections and/or a hawkish outing from Ms Yellen, this may put the Euro’s increasingly unattractive yield profile in stark relief and reinvigorate bearish momentum.

The second is the Scottish Independence referendum. Opinion polls ahead of the ballot essentially point to a 50/50 chance that Scotland will secede from the UK. This implies that – whatever the final result – a surge of volatility is likely to follow the results as those on the wrong side of the outcome are forced to readjust positions. A final vote in favor of independence is likely weigh on Sterling, sending capital fleeing to alternatives. The Euro looks like a natural beneficiary in such a scenario. Needless to say, a victory for the “no” campaign will probably yield the opposite result. – IS

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Record-high UK employment sends pound to 2-year high vs euro

* Euro at weakest vs sterling since September 2012

* Sterling index hits near six-year high

* UK employment at record high

By Jemima Kelly

LONDON, July 16 (Reuters) – The euro fell below 79 pence for the first time since September 2012 on Wednesday while sterling hit another near-six year high against a basket of currencies after data showed UK employment at its highest level ever.

Official data showed the number of people in employment rose by 254,000 to a record 30.643 million in the three months to May. The jobless rate fell to 6.5 percent from 6.6 percent a month earlier, another sign of the recovery in Britain’s economy.

But pay growth was weaker than expected, continuing to lag inflation, underscoring the Bank of England’s view that the recovery can continue without risking a big pickup in price pressures.

That disappointment sent the pound to a day’s low of $ 1.7113 immediately after the data but it later recovered slightly and was last trading at $ 1.7128, down 0.1 percent on the day .

Sterling hit a two-year high of 78.905 pence per euro in European afternoon trading before weakening slightly to trade at 78.975, up a quarter of a percent on the day. The trade-weighted sterling index also hit 89.1, its highest since October 2008.

“Once the market was able to look into the details of the overall employment report, the detail was very positive and provided a lot of evidence that the UK economy is continuing to strengthen and that strength looks to be fairly broad-based,” said Ian Stannard, a currency strategist at Morgan Stanley (Xetra: 885836 – news) .

The pound had hit an almost six-year high of $ 1.7192 on Tuesday after June numbers showed a sharp rise in inflation to 1.9 percent, within touching distance of the BoE’s 2 percent target.

Sterling has been on a bull run for a year now, gaining almost 15 percent against the dollar and just over 10 percent against the euro.

The BoE is expected to be the first major western central bank to raise interest rates. Of its developed world peers, only New Zealand is currently raising rates and that has underpinned the pound, particularly against the euro in the past month.

“Sterling is one of the few currencies that has captured the interest of institutional players in the past few months,” said Benjamin Feuer, head of foreign exchange for EMEA with brokerage New Edge in London.

“Some of the locals here believe sterling is over-valued but I think from an international perspective it is pretty fairly valued. Realistically you probably wouldn’t see it above $ 1.75 but you won’t see it weaken either.”

GILTS

British government bonds were little changed on Wednesday, underperforming German debt for a second consecutive day.

Ten-year gilts’ yield spread over Bunds widened by around 2 basis points to peak at an eight-day high of 146.2 basis points, while the yield was unchanged at 2.65 percent at 1410 GMT.

Marc Ostwald, a strategist at ADM Investor Services International, said that despite weak wage growth figures, the rest of the labour market data strengthened the case for an early BoE interest rate rise.

“You’re looking at data that says (raise rates) sooner rather than later,” he said, referring to strong growth in full-time employment.

Thursday brings little in the way of new data, but the UK Debt Management Office is scheduled to sell 3.25 billion pounds ($ 5.57 billion) of 10-year index-linked gilts.

Ostwald said he expected the issue to get solid demand from insurers and pension funds which need to buy inflation-linked bonds to match their liabilities. But otherwise he saw little attraction in the yield on offer, which offers a return 0.23 percentage points below retail price inflation. (Additional reporting by Patrick Graham and David Milliken; Editing by Andrew Heavens)

Euro-Area Bonds Drop With ECB Seen Not Adding Monetary Stimulus

Euro-area government bonds declined amid speculation the European Central Bank will refrain from adding to stimulus that sparked the biggest bond rally since January last month.

Benchmark German 10-year yields climbed to the highest level in a week. Declines earlier pushed Spain’s 10-year rates to the most in almost two weeks. ECB officials, led by President Mario Draghi, will keep all three of their key interest rates at record lows today, according to Bloomberg surveys of economists. Rate cuts on June 5 fueled a rally from Germany to Greece, with the average yield to maturity on euro-area government bonds falling to an all-time low last week.

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“They’ll want to see if the measures they have taken have an impact on the economy and inflation, so we will have to wait” before there’s a decision on further stimulus, said Piet Lammens, head of research at KBC Bank in Brussels. “With regard to peripheral bonds, the market is taking a breather.”

German 10-year yields increased two basis points, or 0.02 percentage point, to 1.30 percent as of 10:36 a.m. London time after touching 1.31 percent, the highest since June 25. The 1.5 percent bund due in May 2024 fell 0.145, or 1.45 euros per 1,000-euro ($ 1,365) face amount, to 101.815.

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Spain’s 10-year rates were little changed at 2.73 percent after rising to 2.77 percent, the highest since June 20. The yield fell to a record 2.542 percent on June 10.

Record Lows

Rates on similar-maturity Italian bonds were little changed at 2.91 percent, after dropping to an all-time low of 2.694 percent on June 9.

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The average yield to maturity on bonds in the Bank of America Merrill Lynch’s Euro Government Index fell to a record-low 1.3039 percent on June 26. Investors from Frankfurt Trust and AXA Investment Managers said yesterday that the rally in euro-area bonds may struggle to maintain its momentum.

Last month, the ECB cut its main refinancing rate to a record 0.15 percent and moved the deposit rate to minus 0.1 percent. Draghi also said the ECB will introduce targeted offerings of liquidity to banks to encourage them to lend to the real economy, and start work on purchases of asset-backed debt.

“The fireworks were in June and there won’t be any this time around,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “The larger picture is still positive for peripheries.”

Spain sold 4.5 billion euros of bonds due in 2020 and 2044 today, while France auctioned 8.5 billion euros of debt maturing between 2024 and 2030.

Euro-area securities returned 6.9 percent this year through yesterday, Bloomberg World Bond Indexes show. Greek and Portuguese bonds led, with gains of 30 percent and 15 percent, while German securities gained 4.6 percent, the gauges show.

To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at [email protected]; David Goodman in London at [email protected]

To contact the editors responsible for this story: Paul Dobson at [email protected] Keith Jenkins, Todd White

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GLOBAL MARKETS-World equity indexes up on U.S. data, ECB hopes; gold slumps

* Wall St edges up; S&P 500 at new record

* Euro pressured after upbeat U.S. economic data

* Gold slumps to 3-1/2 month low (Updates prices, adds details)

By Angela Moon

NEW YORK, May 27 (Reuters) – World stock markets edged up while the euro softened against the dollar and yen on Tuesday following strong U.S. economic data and on expectations of more rate cuts from the European Central Bank.

A slew of stronger-than-expected data pressured safe-haven assets, including gold, which slipped 2 percent to a 3-1/2 month low. Platinum also fell after South Africa’s mining minister pledged to mediate in a long-running strike.

Wall Street’s S&P 500 hit a record high, led by gains in utility stocks. Data showed orders for long-lasting U.S. manufactured goods unexpectedly rose in April while U.S. single-family home prices also rose in March and beat expectations.

Boosting appetite for risky assets, ECB chief Mario Draghi on Monday bolstered views that the bank will cut euro zone interest rates again next week. Other policymakers drove home the message on Tuesday.

The ECB has discussed “a situation where inflation rates are so low that there is a danger of economic growth being held back,” Austrian ECB board member Ewald Nowotny said. “We will discuss which measures we can take here.”

“June has been signaled as the point in time when Draghi has to do something,” said Art Hogan, chief market strategist at Wunderlich Securities in New York. “We’ve had some false starts with the ECB and we hope this is not another one.”

The day’s gains helped MSCI’s all-world share index move closer to its 2007 record high. The index was up 0.1 percent.

Leading European markets higher, Britain’s FTSE 100 rose 0.4 percent as a flurry of merger activity provided additional support. Intercontinental Hotels Group, buoyed by British media reports of bid interest from the United States, jumped 4.5 percent and was the top performer on the pan-European FTSEurofirst 300, which was up 0.2 percent.

However, investors kept a wary eye on Ukraine, which launched air strikes and a paratroop assault against pro-Russian rebels who seized an airport on Monday.

The escalation was tempered by a decisive win for billionaire Petro Poroshenko in Ukraine’s weekend presidential election, which many hope will stabilize the situation.

On Wall Street, the Dow Jones industrial average was up 50.89 points, or 0.31 percent, at 16,657.16. The Standard & Poor’s 500 Index was up 7.96 points, or 0.42 percent, at 1,908.49. The Nasdaq Composite Index was up 33.50 points, or 0.80 percent, at 4,219.31.

GOLD SLUMPS

Spot gold fell 2 percent to its lowest since Feb. 10 at $ 1,265.76 an ounce in early trade and was down 1.9 percent at $ 1,268.10 an ounce, heading for its worst daily loss in two months. U.S. gold futures dropped 1.8 percent to $ 1,268.50 an ounce.

Gold has struggled to break consistently above the $ 1,300-per-ounce level for the past two weeks, indicating a lack of conviction by investors and speculators, analysts said.

Platinum fell 0.6 percent to $ 1,460.74 an ounce after South Africa’s mining minister pledged to mediate in a strike now in its fifth month. The metal reached its highest since September at $ 1,493.90 last week.

Global oil prices also fell as traders took profits after a long holiday weekend.

Brent was down 42 cents at $ 109.90 a barrel and U.S. light crude oil was down 45 cents at $ 103.90.

The euro steadily lost ground against the greenback as investors returned from long holiday weekends and encountered better-than-expected economic data.

In New York trade, the euro fell 0.15 percent to $ 1.3625 , plumbing Monday’s three-month low of $ 1.3614. Against the yen, the euro softened 0.14 percent to 138.07.

The dollar index reversed course and gained ground against a basket of currencies to rise 0.03 percent.

U.S. Treasury prices inched lower, with the 30-year Treasury bonds down 2/32 in price to yield 3.400 percent, compared with 3.397 percent on Friday. Benchmark 10-year U.S. Treasury notes were unchanged in price to yield 2.532 percent.

(Reporting by Angela Moon; Editing by Dan Grebler)