September 7, 2012 / 2:52 AM / 6 years ago

ECB's bond-buy plan buoys markets, U.S. payrolls eyed

LONDON (Reuters) - Stock markets in Europe and Asia gained on Friday, and yields on the debt of struggling euro zone nations fell as investors welcomed the European Central Bank’s latest bond-buying plan and positioned for a strong U.S. jobs report.

A cameraman stands in front of the DAX board at the Frankfurt stock exchange August 29, 2012. REUTERS/Remote/Lizza May David

Expectations of a big rise in U.S. nonfarm payrolls numbers, due out at 1230 GMT, have risen since data on private sector employment showed robust growth for last month.

But the markets main driver has been the ECB’s new and potentially unlimited bond buying plan, which is hoped will lower the borrowing costs facing indebted nations like Spain and Italy and ease fears over the future of the single currency.

The broad FTSEurofirst 300 index .FTEU3 of top European companies was up 0.3 percent at 1,107.73 points in early trade after climbing 2.6 percent on Thursday when the plan was announced.

“I am positive on the market in the near term. You have got the policy response coming through, valuations are still OK, and the macroeconomic backdrop isn’t all that bad. These three things add to the momentum in the market,” said Graham Bishop, equity strategist at Exane BNP Paribas.

Reaction to the ECB program had earlier sent U.S. stocks to multi-year highs .N and put Asian shares on track for their biggest daily gain in six weeks on Friday.

The gains have lifted the MSCI’s world equity index .MIWD00000PUS back to levels last seen in early May after a rise of about 2.4 percent over the past 24 hours.

The euro rose 0.3 percent to a two-month peak against the dollar of $1.2670 and also hit a two-month high against the safe-haven yen and a one-month peak versus the Swiss franc in response to the ECB plan.

In the debt market Spanish 10-year government bond yields were 19 basis points lower in early trade at 5.89 percent and below 6 percent for the first time since May, while equivalent Italian bonds were down 13 basis points at 5.19 percent.

Reporting by Richard Hubbard; Editing by Will Waterman

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