Stocks rose across the world after the European Central Bank lent $639-billion out to more than 500 European banks, the biggest infusion of ECB credit into the banking system in the euro's history.
Britain's FTSE 100 gained 0.4 per cent, France's CAC 40 rose 0.8 per cent, while Germany's DAX rose 0.5 per cent. Japan's Nikkei surged 1.5 per cent, while Hong Kong's Hang Seng leapt 1.9 per cent, following a 337-point rise by the Dow on Tuesday.
Dow stock futures rose 41 points, or 0.3 per cent, to 12,072. S&P 500 futures were up 3.2 points, or 0.3 per cent, at 1,239 points.
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What makes the ECB's 489-billion euro liquidity infusion so impressive? It is ultra-cheap, and for an unprecedented three years. To put it in perspective: When Lehman Brother collapsed, the bank lent out only 442-billion euros, for one year. Traders polled by Reuters just hours before the operation expected the ECB to allot 310-billion euros, up from a forecast of 250-billion euros in a poll on Monday.
The ECB indicated the loans were designed to boost trust in banks, free up money markets and tempt banks to buy Italian and Spanish debt. It is trying to make sure that banks have enough ready cash to operate and keep lending to businesses so that a credit crunch does not choke off economic growth.
The funds were offered at an interest rate which will be the average of ECB's main interest rate over the next three years. The benchmark rate is at a record low of 1.0 per cent.
Also coming to Europe's aid was Norway, which said it will provide 55-billion kroner ($9.3-billion) to the International Monetary Fund to help heavily indebted nations avoid default. Norway is not part of the European Union, and its economy is cushioned by income from its oil and gas exports.
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The euro rose 0.7 per cent to $1.3170 (U.S.).
Gold, which rose to a one-week high on encouraging economic data from the United States and Germany, eased back to $1,626.89 an ounce.
Copper prices rose to their highest levels in more than a week. Benchmark copper on the London Metal Exchange traded at $7,486 a tonne.
U.S. crude oil rose 0.3 per cent to $97.55 a barrel.
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The Canadian dollar traded at 97.52 U.S. cents.