The eurozone started recovering from its longest-ever recession just over two years ago but growth has never managed to break out of a narrow range, despite favorable conditions such as cheaper oil, a lower euro and weak inflation.
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Mr Draghi, who was not ECB president when the decisions were taken in 2012, reminded the MEPs that the Government chose to guarantee the banks without telling any of its eurozone partners.
He agreed that the European Central Bank advised against burning bondholders, but said that ultimately this was up to the Irish authorities, and that the rapid recovery of the economy proved the action was right.
Reacting to news of further quantitative easing, German 10-year bond yields declined to 0,6%. The euro is likely to locate support around the 1.05 zone.
Expectations for European Central Bank easing are in sharp contrast to those for U.S. monetary policy. With USA data signalling the world’s biggest economy may be strong enough to withstand higher rates, investors are monitoring figures from overseas to gauge whether there are any threats to American growth that may still concern the Fed.
The remarks were described as “unequivocally dovish” by Marchel Alexandrovich at the investment bank Jefferies and at one point they sent the euro down to $1.069, although the single currency later rebounded.
Renault lost 1.2 percent and peer Peugeot dropped 1.5 percent. France’s largest market, the CAC 40 fell 1.94% on the day. Many investors expect the central bank to cut interest rates or expand its bond-buying program next month.
On the corporate front, shares in Rolls-Royce tanked after the aerospace and engineering company issued another profit warning.
In the USA, futures point to a cautious outlook on Wall Street.
Earlier in Asia, stocks shrugged off the overnight fall on Wall Street as oil bounced back from its lowest in over two months and a bumper Australian employment report sent out encouraging signals on the region’s economy.
Mid-afternoon, London’s benchmark FTSE 100 index was down 0.9 percent compared with Thursday’s close.
Portugal did not grow at all in the third quarter and Finland’s economic contraction was bigger than expected.
“What we’ve seen in the data leading up to this is very low-end industrial production, and missed expectations, and weak factory orders, so any kind of suggestion that this is a result of infiltrated weakness coming from emerging markets will release expectations that Draghi will act”, said Eimear Daly, a currency strategist at Standard Chartered, told Bloomberg TV on Friday.
Gold edged down 0.4% to $1,080.80 an ounce.
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Copper futures in London hit a 6-year low of US$4,851 a tonne and platinum hit its lowest since late 2008 at US$771.70 an ounce.
