(MENAFN- Gulf Times) European stocks rallied yesterday on optimism over quantitative easing in the eurozone, with Frankfurt topping 12,000 points for the first time, but the euro recovered after hitting another 12-year dollar low.
Germany's leading stock market index smashed through the psychologically important level, one week after the European Central Bank began its ‚¬1.14tn ($1.201tn) bond-buying stimulus.
Frankfurt's benchmark DAX 30 soared 2.24% to a new record close at 12,167.72 points. The DAX has gained 24% since the beginning of the year.
London's FTSE 100 index rose 0.94% to close at 6,804.08 points, and the CAC 40 in Paris climbed 1.01% to 5,061.16 points.
"The benefits of the ECB's QE policy continue to drive European equities higher with the DAX leading the way," said market analyst Alastair McCaig at traders IG. "Germany continues to spearhead the move higher for the rest of the eurozone."
In foreign exchange activity, the euro rebounded after hitting a fresh 12-year low against the dollar at $1.0458 in earlier Asian trading hours, its lowest level since early January 2003. But the European single currency later recovered to $1.0608, up from $1.0489 late in New York on Friday.
Investors are keeping their focus on the Fed's policy meeting tomorrow, seeking a clearer timeline for when it will raise interest rates as the US economy strengthens.
"The relentless climb of the US dollar will come under further scrutiny this week as the US Federal Reserve meets," said Currencies Direct dealer Alistair Cotton. "The market is looking for changes to the wording of the press release, with the possible removal of the word 'patient' from language about rate hikes to indicate that we remain on course for a first rate increase in June."
Global markets took a hit last week and the dollar rallied in reaction to a strong US jobs report that increased the likelihood of a summer rate rise.
But while equities have settled, the euro has also been battered by the ECB's new bond-buying stimulus programme.
"The divergence in policy expectations between the Fed and the ECB has been the primary driver of downside pressure in euro/dollar," noted Rabobank analyst Jane Foley. "However, the start of QE from the ECB has also provided fresh incentive to eurozone stock markets."
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