LONDON (Reuters) - The euro fell a full cent against the dollar and government borrowing costs dropped on Thursday, after the European Central Bank vowed not to raise euro zone interest rates before the middle of next year.
The bank said it was pulling the plug on its 2.55 trillion euro stimulus program but after the Federal Reserve raised U.S. interest rates for the second time this year on Wednesday the ECB rate promise came as a relief.
The pan-European STOXX 600 index raced back into positive territory after a morning in the red, though basic resources stocks stayed down more than 1 percent .SXPP after weak data from big metals consumer China. [.EU]
Germany's DAX .GDAXI and France's CAC40 .FCHI led the stocks rebound, while the euro tumbled back toward $1.17 from well over $1.18 EUR=EBS [/FRX]. Euro zone government borrowing costs slid too as traders recalibrated prices for a longer period of sub-zero ECB rates.
“The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019 and in any case for as long as necessary (to get inflation
back to near 2 percent),” the ECB said.
Germany’s Bunds were offering 0.46 percent compared with 0.49 percent DE10YT=RR before the ECB statement.
U.S. Treasuries meanwhile were down to 2.94 percent US10YT=RR having briefly topped 3 percent overnight after the Federal Reserve had pushed up its interest rates.
