EUROPEAN Central Bank chief Mario Draghi has pledged full support for Europe's single currency, boosting stock markets and easing pressure on Spanish borrowing costs.
The "ECB is ready to do whatever it takes to preserve the euro. And believe me it will be enough," Draghi told the Global Investment Conference on Thursday, a business summit organised by the British government in London.
Draghi also said that keeping risk premiums under control was part of the central bank's mandate as they affected the transmission channels for ECB policy.
French Economy Minister Pierre Moscovici welcomed Draghi's remarks, calling them "totally positive," and sovereign debt market pressure on Spain eased as well.
The interest rate, or yield, on 10-year Spanish bonds fell to 7.197 per cent from 7.376 per cent on Wednesday, a level that is nonetheless still considered unsustainable over the long term.
On stock markets, London's benchmark FTSE 100 index jumped 1.08 per cent to 5,557.46 points, the Paris CAC 40 leapt 2.08 per cent to 3,145.83 points and Frankfurt's DAX 30 rose 1.18 per cent to 6,481.82.
The Italian stock market leapt by more than 4.0 per cent and the Spanish exchange gained more than 3.0 per cent.
"This morning's comments by ECB president Mario Draghi look to have been the main catalyst sending the markets higher," CMC Markets analyst Michael Hewson told AFP.
"In particular the comments about doing whatever it takes within the central bank's mandate to preserve the euro has seen markets rebound, but the statement that addressing high yields on sovereign debt in the euro area comes within the central bank's mandate is particularly noteworthy.
"It suggests that the ECB may well do something about capping rising bond yields. Attention will now inevitably shift the focus towards next week's ECB rate meeting to see if he (Draghi) means what he says," Hewson added.
Financial markets have relentlessly tested the eurozone's ability to overcome debt crises in countries like Greece, Ireland, Portugal and Spain, and the ECB is the European Union institution most able to react quickly to developments.
ECB responses to date include two cash injections of more than one trillion euros ($1.21 trillion) in the eurozone banking system via long-term refinancing operations and the purchase of government bonds on secondary markets.
The central bank has also cut its benchmark refinancing rate to a record low of 0.75 per cent.