Scoreboard: Super Mario

European investors cheered the ECB's decision to cut rates and launch a stimulus program, while Wall Street reversed early gains as the energy sector came under pressure.

In US economic data, the Markit Services Sector PMI eased from 60.8 to 59.5 in July. The US ADP Employment survey showed an increase of 204,000 private sector jobs in August. The US trade deficit narrowed from $40.8 billion to $40.5 billion in July -- a six month low. The result was driven by a 0.9 per cent lift in exports to a record high of $198 billion in July.

The European Central Bank unexpectedly cut the benchmark interest rate by 10 basis points to 0.05 per cent and the deposit rate to minus 0.2 per cent. The ECB also signalled at least €700 billion worth of fresh aid, committing to buying mortgage backed securities and easing funding conditions for regional banks.

European shares rose on Thursday, with the benchmark FTSEurofirst 300 lifting to a six-year high as the additional stimulus by the ECB supported sentiment. Trading volumes were 40 per cent higher than the daily average for the past three months. The rally was broad-based with all sectors higher led by the financial sector. The FTSEurofirst 300 index rose by 1.1 per cent with the German Dax up 1 per cent while the UK FTSE rose by 0.1 per cent. Australia's major miners were mixed in London trade with shares in BHP Billiton up by 0.7 per cent while Rio Tinto fell by 0.4 per cent.

US sharemarkets reversed course late in the session as energy shares fell and investors paused ahead of Friday's jobs report. Earlier in the session the Dow and S&P 500 touched fresh record highs after the ECB's surprise move. At the close the Dow Jones index settled lower by almost 9 points or 0.1 per cent. The broader S&P 500 index fell by 0.2 per cent while the Nasdaq lost 10 points or 0.2 per cent.

US treasury prices fell on Thursday (yields higher) as the aggressive expansionary ECB supported the demand for riskier asset classes. US 2-year yields rose 2 points to 0.536 per cent while US 10-year yields rose by 5 points to 2.453 per cent.

Major currencies were mixed against the US dollar over the European and US sessions on Thursday. The euro fell from highs near $US1.3145 to around $US1.2925, before ending US trade near $US1.2940. The Australian dollar rose from lows near US93.25c to highs near US93.85c before ending the US session at US93.50c. And the Japanese yen eased from 104.85 yen per US dollar to JPY105.35, ending US trade near JPY105.20.

World oil prices fell on Thursday on the back of a stronger US dollar. A stronger greenback reduced the purchasing power of commodity buyers in Europe and Asia. Brent crude fell by US94c or 0.9 per cent to $US101.83 a barrel with the US Nymex price down by $US1.09 a barrel to $US94.45 a barrel.

Base metal prices were mostly higher by up to 1.7 per cent on Thursday with Nickel up the most on speculation that Philippines could follow Indonesia and ban unprocessed ore exports. Gold prices fell in line with oil as the US dollar strengthened. The Comex gold futures quote was down by $US1.40 or 0.1 per cent to $US1,268.90 per ounce. Iron ore fell by $US1.40 or 1.7 per cent on Thursday to $US84.30 a tonne.

Ahead: In Australia, no economic data is released. In the US non-farm payrolls figures are released.

Craig James is the chief economist at Commsec.

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