London - AFP
European Central Bank chief Mario Draghi pledged Thursday full support for Europe\'s single currency, boosting stock markets and easing pressure on Spanish borrowing costs. The \"ECB is ready to do whatever it takes to preserve the euro. And believe me it will be enough,\" Draghi told the Global Investment Conference, a business summit organised by the British government in London. Draghi also said that keeping risk premiums under control was part of the central bank\'s mandate as they affected the transmission channels for ECB policy. French Economy Minister Pierre Moscovici welcomed Draghi\'s remarks, calling them \"totally positive,\" and sovereign debt market pressure on Spain eased as well. The interest rate, or yield, on 10-year Spanish bonds fell to 7.197 percent from 7.376 percent on Wednesday, a level that is nonetheless still considered unsustainable over the long term. On stock markets, London\'s benchmark FTSE 100 index jumped 1.08 percent to 5,557.46 points, the Paris CAC 40 leapt 2.08 percent to 3,145.83 points and Frankfurt\'s DAX 30 rose 1.18 percent to 6,481.82. The Italian stock market leapt by more than 4.0 percent and the Spanish exchange gained more than 3.0 percent. \"This morning\'s comments by ECB president Mario Draghi look to have been the main catalyst sending the markets higher,\" CMC Markets analyst Michael Hewson told AFP. \"In particular the comments about doing whatever it takes within the central bank\'s mandate to preserve the euro has seen markets rebound, but the statement that addressing high yields on sovereign debt in the euro area comes within the central bank\'s mandate is particularly noteworthy. \"It suggests that the ECB may well do something about capping rising bond yields. Attention will now inevitably shift the focus towards next week\'s ECB rate meeting to see if he (Draghi) means what he says,\" Hewson added. Financial markets have relentlessly tested the eurozone\'s ability to overcome debt crises in countries like Greece, Ireland, Portugal and Spain, and the ECB is the European Union institution most able to react quickly to developments. ECB responses to date include two cash injections of more than one trillion euros ($1.21 trillion) in the eurozone banking system via long-term refinancing operations and the purchase of government bonds on secondary markets. The central bank has also cut its benchmark refinancing rate to a record low of 0.75 percent. Eurozone leaders have agreed meanwhile on measures to help stem the crisis, and Draghi stressed on Thursday that \"progress has been extraordinary in the last six months\". But analysts have said that Europe\'s current anti-crisis strategy is having only a limited effect and the central bank is the only player currently capable of acting fast enough. The bank could inject even more money into the banking sector, resume its purchases of government bonds on secondary markets, cut interest rates further, or come up with a way to provide eurozone financial rescue funds with more resources, analysts say. \"Draghi\'s comments underpin recent remarks by ECB members such as (Austrian central bank chief Ewald) Nowotny yesterday that the central bank could participate in beefing up current measures, such as increasing the firepower of ESM bailout funds, which would lead the ESM to have a banking licence,\" ETX Capital economist Ishaq Siddiqi said. He referred to the future eurozone rescue fund, the European Stability Mechanism. \"This suggests the ECB is moving closer to undertake QE (quantitative easing), which would be a much-needed shot in the arm for markets and go some way into forming the fiscal unity the euro-area desperately needs in order to arrest the debt crisis,\" Siddiqi said. Quantitative easing is a policy under which central banks pump cash into the economy to reinvigorate slumping business activity.