Europe and US stock markets rallied Friday as investor reassessed the European Central Bank's massive stimulus package in a positive light a day after a wild ride on markets.
Wall Street kept in positive territory all day, following Europe's main stock markets higher as investors digested the ECB's mixed monetary policy announcement that provoked market turmoil Thursday.
ECB President Mario Draghi delivered an unexpectedly large package of actions to kickstart the ailing eurozone economy, but the market's enthusiasm faded after he signaled there would be no further interest rate cuts, sending stocks lower Thursday.
On Friday investors shrugged off that disappointment. Both Frankfurt's DAX 30 index and the Paris CAC 40 index ended the day up more than 3.0 percent, while Milan outperformed with a 4.8 percent jump and Madrid added 3.7 percent.
Outside the eurozone, London's benchmark FTSE 100 index gained 1.7 percent, with financial and commodity stocks leading the way.
Pointing to gains in European financial shares, Patrick O'Hare of Briefing.com said that investors decided the ECB did the banks a solid favor by introducing the new targeted longer-term refinancing operations and agreeing to include corporate bonds into its quantitative easing bond-buying program.
"Sure, deposit rates went deeper into negative territory, but if Mr. Draghi is right and they aren't going any lower, investors must be thinking that they can now only go higher. That's a plus for net interest margins down the road," O'Hare said.
The Dow Jones Industrial Average added 1.3 percent. The broad-market S&P 500 rose 1.6 percent and the tech-rich Nasdaq Composite led the advance, up 1.8 percent.
JPMorgan Chase, the largest US bank, gained 1.3 percent, while Bank of America and Citigroup both leaped 3.9 percent.
Blue-chip industrials scored big advances, with DuPont up 2.7 percent, Caterpillar 2.0 percent, Boeing 1.4 percent and General Electric 1.3 percent.
- IEA sees oil 'bottom' -
Analysts also pointed to market support from an International Energy Agency report that said oil prices "might have bottomed out". US oil prices closed 1.7 percent higher and Brent gained 0.8 percent.
The euro was slightly lower on the dollar at 1.1149 after huge swings on Thursday due to the mixed message that came with the ECB's rate cuts.
Despite the week ending on a positive note, there were concerns about how effective the ECB can be in fighting the sluggishness in the 19-nation shared currency bloc, where deflation is looming.
"We continue to believe the ECB is approaching the limits of what it can realistically deliver in order to comply with its mandate to ensure price stability," Barclays analysts said in a reseach note.
FXTM research analyst Lukman Otunuga wrote in a note to clients that "stock markets are still vulnerable and may be poised for further decline in the future as the ECB fiasco compounds to the ongoing global woes."
Market attention now turns to next week's policy meetings for the Federal Reserve, with hopes for some guidance on the outlook for US interest rate policy. The Bank of Japan and Bank of England also meet on policy.
- Key figures around 2200 GMT -
New York - Dow: UP 1.3 percent at 17,213.31 (close)
New York - S&P 500: UP 1.6 percent at 2,022.19 (close)
New York - Nasdaq: UP 1.8 percent at 4,748.47 (close)
London - FTSE 100: UP 1.7 percent at 6,139.79 (close)
Frankfurt - DAX 30: UP 3.5 percent at 9,831.13 (close)
Paris - CAC 40: UP 3.3 percent at 4,492.79 (close)
EURO STOXX 50: UP 3.5 percent at 3,073.80 (close)
Tokyo - Nikkei 225: UP 0.5 percent at 16,938.87 (close)
Shanghai - composite: UP 0.2 percent at 2,810.31 (close)
Hong Kong - Hang Seng: UP 1.1 percent at 20,199.60 (close)
Euro/dollar: DOWN at 1.1149 from 1.1183 on Thursday
Dollar/yen: UP at 113.79 yen from 113.17 yen