Euro climbs as ECB adds stimulus, U.S. stocks slip

FILE PHOTO: Dollar, Euro and Pound banknotes are seen in this picture illustration

By Caroline Valetkevitch

NEW YORK (Reuters) -The euro rose on Thursday as the European Central Bank rolled out yet more stimulus measures to lift the currency bloc out of a double-dip recession, while the S&P 500 ended slightly lower following an increase in weekly U.S. jobless claims.

Energy shares were sharply higher, with oil prices climbing nearly 3% and Brent rising above $50 a barrel for the first time since early March, fueled by hopes of a faster demand recovery.

The ECB expanded its debt purchase scheme and agreed to provide banks with even more ultra-cheap liquidity as long as they keep passing the cash onto companies. It said it is monitoring the euro’s exchange rate with regard to its possible implications for the medium-term inflation outlook.

Strategists said the level of the measures may ensure that current monetary accommodation will be extended well into 2022.

Sterling weakened as investors became more cautious about the risk of a no-deal Brexit.

The euro was up 0.49% to $1.214, while sterling was last trading at $1.3295, down 0.75% on the day.

On Wall Street, the S&P 500 and Dow ended lower as the jump in jobless claims pointed to a stalling labor market recovery, though focus remained on stimulus talks.

A U.S. Senate vote on a stopgap measure to keep the government running could slip to the Friday deadline, as a top Democrat suggested wrangling over a spending package and coronavirus aid could drag on through Christmas.

“We are in a bit of a trough, we’ve hit a valley right now and it’s all based on accelerating through this,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management in New York.

“We need that announcement, without that announcement we are going to have volatility through the end of the year, without a doubt.”

The Dow Jones Industrial Average fell 69.55 points, or 0.23%, to 29,999.26, the S&P 500 lost 4.72 points, or 0.13%, to 3,668.1 and the Nasdaq Composite added 66.86 points, or 0.54%, to 12,405.81.

The pan-European STOXX 600 index lost 0.44% and MSCI’s gauge of stocks across the globe gained 0.03%.

In the bond market, strong demand for the $24 billion in 30-year U.S. Treasury bonds on auction drove longer-dated yields lower and the yield curve flatter.

The 30-year yield fell to session lows after the auction and was last down 5.3 basis points to 1.636%. The benchmark 10-year yield fell 3.3 basis points to 0.908%.

Brent crude rose $1.39, or 2.8%, to settle at $50.25 a barrel, gaining for a third day. U.S. West Texas Intermediate (WTI) crude gained $1.26, or 2.8%, to settle at $46.78.

Spot gold prices were slightly lower.

($1 = 0.8255 euros)

(Reporting by Caroline Valetkevitch; additional reporting by Karen Brettell in New York, Shriya Ramakrishnan in Bengaluru and Marc Jones in London; Editing by Dan Grebler, Nick Zieminski and David Gregorio)