European Central Bank chief sees potential turmoil from elections

By extending bond purchases but reducing the monthly pace, the European Central Bank could be trying to preserve its extraordinary monetary stimulus as political risks cloud the outlook for the euro area's recovery, analysts said.

(AP Photo/Koji Sasahara). A man walks by an electronic stock board of a securities firm in Tokyo, Friday, Dec. 9, 2016.

EURO STIMULUS: The European Central Bank surprised investors by saying it will reduce the size of its monthly bond purchases. That was followed by the government's Half-Year Economic and Fiscal Update (HYEFU), which projected economic growth averaging 3 percent a year for the next five years, swelling the tax take and allowing the government to increase spending on infrastructure such as Auckland's City Rail Link. Meanwhile, economic growth is only modest at 0.3 percent in the third quarter. This has also set the Dow and S&P 500 to stay on pace to keep bringing in new record highs.

SOUTH KOREAN IMPEACHMENT: South Korean lawmakers voted to impeach Park over a corruption scandal that drew millions of demonstrators into the streets demanding she step down.

Such expectations helped shrug off concerns over political instability in Italy after Prime Minister Matteo Renzi resigned on the back of a resounding defeat on Sunday in a referendum over his plans for constitutional reform.

The S&P 500 index climbed 0.2 percent to 2,246.12 as of 4 NY, reaching a new peak and swelling its post-election rally to more than 5 percent. This means that the Bundesbank can keep buying German bonds for longer, and heads off the toxic issue of back-door "mutualisation" where the Bundesbank starts having to buy other countries's debt in order to keep QE going. A stronger greenback has been the consensus since Donald Trump's election as USA president, but some analysts have begun to question the rally's durability.

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The QB had another solid outing Sunday, passing for 346 yards and two scores while completing almost 70 percent of his throws. We didn't convert the first two 3rd and ones , and then the next time we got the ball was mid way through the second quarter.

"At first sight, this would have seemed to be a hawkish move, but ECB President Draghi managed to package this decision with dovish commentary, by stressing that the ECB stands ready to increase or extend QE if needed and that tapering wasn't discussed and is "not in sight", said strategists at UBS. Beijing has been cracking down on corruption and is concerned over outflows of capital as the Chinese currency weakens against the dollar.

Wall Street pulled back following a strong natural disaster in California after NY trading began, but that wasn't enough to subdue MSCI's world index amid Europe's gains and after Asia ex-Japan had hit a one-month high overnight. The attention now shifts to the Federal Reserve, with traders all but convinced policy makers will end the year with an interest-rate hike. The euro jumped to a one-month high of 1.0875 against the United States dollar, but quickly retreated to 1.0753.

In 1.11pm trading in NY, the Dow Jones Industrial Average increased 0.43 percent, while the Nasdaq Composite Index rose 0.36 percent. The Australian dollar slipped 0.2 per cent to US74.61¢.

Hong Kong's Hang Seng Index fell 0.4%, however, due to a sharp selloff in casino stocks.

OIL: Benchmark U.S. crude oil rose 33 cents to $51.17 per barrel in electronic trading on the New York Mercantile Exchange. USA light, sweet crude was up 0.8 percent, at $50.17 a barrel. But Brent crude is up 14 per cent in the past three months, leaving monetary policy as the chief driver of consumption. The yield on the 10-year Treasury note rose to 2.39 per cent from 2.34 per cent.

The dollar rose to 114.20 yen from 113.85 yen.