Global stocks rally as ECB chief vows support for euro

Stocks soared in the US and Europe on Thursday after the European Central Bank president vowed to "do whatever it takes" to preserve the continent's monetary union.

The Dow Jones industrial average soared 234 points to 12,913 in the first hour of trading, following European markets sharply higher. Benchmark indexes in Spain and Italy each jumped 5 per cent. France's stock market surged 3 per cent.

The comments from Mario Draghi at an investor conference at the Olympics raised hopes that Europe's central bank might intervene in markets to bring down the cripplingly high borrowing costs for struggling European countries like Spain and Italy.

After insisting for months that it was up to governments to restore confidence in the euro, Draghi's pledged that "the ECB is ready to do whatever it takes to preserve the euro."

In other signs that investors were becoming more confident that Europe's financial crisis would not spin out of control, the euro surged against the dollar and the yield on the 10-year Treasury note rose. Borrowing costs for Spain and Italy fell sharply.

In other US trading, the Standard & Poor's 500 index rose 23 points to 1,361 and the Nasdaq composite index rose 43 points to 2,897, despite more disappointing news from technology companies including the online game maker Zynga.

Several U.S. companies were also rising sharply after reporting stronger earnings. Sprint Nextel jumped 48 cents, or 14 per cent, to $3.84. The country's third-largest wireless carrier was successful in convincing smartphone subscribers to pay up for "unlimited data" service, and its service revenue zoomed higher, beating analysts' estimates.

The gains in the U.S. stock market were broad. All 10 of the industry groups in the S&P 500 index rose, led by telecommunications companies.

In Europe, Draghi's comments came after days of uncertainty and rising concern over Spain's recession and banking industry, which is reeling following the implosion of a real estate bubble. As borrowing costs for both Spain and Italy rose in the past week, investors feared that both countries might need to be rescued, as Greece, Portugal and Ireland have been. .

The borrowing costs for Spain's government plunged following Draghi's comments as investors anticipated that the European Central Bank might step up its purchases of Spanish government bonds.

The yield on Spain's benchmark 10-year bond dropped almost half a percentage point, an enormous move, to 6.93 percent. That rate surged as high as 7.54 percent this week as investors dumped the country's bonds and lost confidence in Spain's ability to manage its debts.

Technology companies continued to report disappointing earnings following industry leader Apple's rare earnings disappointment earlier this week.

Zynga Inc., which produces popular social network games "CityVille" and "FarmVille" posted poor quarterly results and cut its outlook, prompting a number of analyst downgrades. Its stock fell $2.04, or 40 percent, to $3.03.

The news also dragged down shares of Facebook, which got about 12 per cent of its 2011 revenue from Zynga. The poor results may hurt Facebook's second-quarter revenue when it reports its own quarterly results later Thursday. Facebook fell $1.74, or 6 per cent, to $27.61.

Dow Chemical fell 78 cents, or 2.5 per cent, to $29.58. The country's largest chemical maker, said it could accelerate cost-cutting efforts after its second-quarter net income fell 34 per cent.