March 8, 2018 / 1:03 PM / 7 months ago

Euro, bond yields rise after ECB drops easing bias

LONDON, March 8 (Reuters) - The euro and government bond yields in the single currency bloc rose on Thursday after the ECB dropped a promise to increase bond buys if needed, taking a baby step towards dialling back its extraordinary monetary stimulus.

Europe’s single currency erased earlier losses and rose back above $1.24 after the ECB decision.

The euro, which was down 0.3 percent at $1.2378 before the announcement, firmed to the day’s high of $1.2431 before easing back 0.1 percent to $1.2409.

Government bond yields meanwhile rose across the region, with Germany’s 5-year bond yield hitting a two-week high at 0.095 percent.

European shares slightly reduced earlier gains but remained within their daily trading range. The pan-regional STOXX 600 index was up 0.1 percent by 1252 GMT, while the export-oriented German DAX index fell 0.4 percent, above its daily low.

British government bond futures extended losses by around 15 ticks to hit a session low. They were last down 26 ticks on the day at 121.00.

Having bought bonds for three years to depress borrowing costs, the ECB said it could still extend the purchases beyond September if needed but omitted a long-standing reference to increasing them — a largely symbolic step that is seen as a precursor to a broader policy revision later this year. (Reporting by the London Markets Team; editing by Sujata Rao)

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