U.S. stocks rose, erasing an early tumble, amid speculation the European Central Bank was preparing to buy Italian and Spanish bonds to halt the region’s debt crisis.
The Standard & Poor’s 500 Index climbed 1 percent to 1,211.76 at 12:50 p.m. in New York after slumping 2.7 percent earlier. The Dow Jones Industrial Average rallied 153.79 points, or 1.4 percent, to 11,535.45. Both gauges sank the most since 2009 yesterday amid concern the U.S. economy was weakening.
Stocks erased losses after Reuters said the European Central Bank is pressuring Italy to make further reforms in return for buying Italian and Spanish bonds. Italy’s government will announce plans to speed up state-asset sales, liberalize the labor market and introduce a balanced-budget amendment into the country’s constitution, Sky TG24 reported today, citing unidentified officials.
European leaders are hunting for solutions to the debt crisis, helping Italy and Spain gain a respite from the market turbulence after the resumption of the ECB bond-buying program.
The ECB would be willing to buy more bonds of deficit-hit countries once they take “concrete” steps to stabilize their finances, European Central Bank council member Luc Coene said.
“Certainly the ECB is ready to make major efforts to relieve the situation, but first the countries have to take steps,” Coene, head of Belgium’s central bank, told RTBF radio in Brussels today. “It doesn’t make sense to pour water into a bucket with a hole in it.”
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