STOCK MARKET WATCH, Wednesday, December 21, 2011.

[Ghost Dog]

9. Stocks and euro gain ahead of ECB tender

LONDON, Dec 21 (Reuters) - European stocks rallied and the euro was well bid on Wednesday as investors priced in an improvement in the economic outlook and looked forward to a big take up by banks of the European Central Bank's first-ever offer of three-year loans...

... The ECB will offer banks unlimited amounts of low-cost, three-year funds against collateral now more broadly defined, which many analysts hope will encourage buying of high-yielding Spanish and Italian bonds, helping ease the crisis in the euro bloc...

... The FTSEurofirst 300 index of leading shares rose 0.7 percent in early trading, but is still down some 13 percent in 2011, as the euro zone debt crisis and worries about a recession have taken their toll.

The euro stood at $1.312, up 0.3 percent after rising to an Asian session high of $1.31278 on heavy short-covering. The single currency gained 0.6 percent on Tuesday and rose as high as $1.3132, well off an 11-month low seen last week of $1.2945.

German government bonds are edging lower ahead of the ECB operation but in very low volumes as the holiday season approaches... Italian and Spanish government 10-year bond yields have fallen to around 6.62 percent and 5.14 percent respectively, moving further away from the levels above 7 percent that were widely seen as unsustainable...

/... http://www.reuters.com/article/2011/12/21/markets-global-idUSL6E7NK3KO20111221?rpc=401