Financial markets bounced back around the world yesterday after the Dow and the Standard & Poor's 500 scored their biggest gains in three months.
The rally in share prices started after efforts to resolve the European Union's debt crisis. That helped push the S&P above 1200, an important technical level that signals the potential for the rally to continue. The Nikkei rose to a five-month high.
Forsyth Barr broker Tony Conroy said the S&P 500 moved out of its recent trading range as some of the panic of previous days eased and dissipated.
Investors focused on valuations that many analysts said were too cheap. But volume was "average" - a sign fund managers were not fully participating.
By mid-afternoon barely $34 million had changed hands on the NZX-50 which had risen 0.5%. Institutions were sitting on their holdings, he said.
The ASX-200 was up nearly 1.8% two hours after opening. Both transtasman markets were reacting to the data out of the United States which was not as bad as expected.
"We are not seeing any major investors doing much in the market. The influence is coming from offshore," Mr Conroy said.
A US official told Reuters that Washington would support boosting an EU rescue facility through the International Monetary Fund.
Rescue packages for Ireland and Greece this year have done little to quell market fears that other weaker eurozone members, including Portugal and Spain, will need aid at some stage.
"It seems that as bad as Europe's issues are, there is a growing sense this is not a systemic problem that is going to bring the whole system down," Harris Private Bank chief investment officer Jack Ablin said in Chicago.
The global economic recovery remained sound. US private-sector payrolls achieved their biggest gain in three years while global manufacturing picked up speed, boosted by China and Germany.
The euro held gains made early yesterday, having posted its biggest one-day rise in six weeks as the market cut short positions before the European Central Bank meeting overnight.
Investors are hoping the central bank will help calm hysteria over the eurozone debt crisis by expanding its bond purchase programme to support peripheral eurozone government debt markets.
"... if the ECB wants to stop contagion, it needs to announce a plan that is both big and durable, say one trillion euros or more over the coming quarters," Societe Generale analysts wrote in a client note.
"This, however, is unlikely to happen today. We fear that hopes created on Wednesday will be disappointed. A mild version, where the ECB warns that its SME [small, medium-sized enterprise] programme is still up and running and might be beefed up, will hardly suffice."
