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Business

Euro hits 12-year low as stocks soar

The euro has plumbed new lows and is on its way to hitting parity with the US dollar. With the single currency's devaluation helping major exporters, Germany's DAX index closed at yet another high.

Wednesday saw the euro slumping to $1.0557, the lowest level recorded since March 2003. The currency later recovered to $1.0575, still well below the $1.07 mark it reached in New York late on Tuesday.

"Rising expectations for higher US interest rates and an escalation of the Greek crisis could push the euro down to parity against the US dollar and beyond," Capital Economics Chief European Economist Jonathan Loynes told the AFP news agency.

The renewed drop of the euro coincided with yet another surge in the value of many European stocks, including those listed in Germany's DAX-30.

The only way is up

The German blue chip index on Wednesday shot above the 11,800-point threshold for the first time in its history, gaining 2.66 percent from Tuesday's close.

Stocks got a boost from the latest remarks by ECB President Mario Draghi, who had offered an optimistic take on the expected impact of

the lender's huge bond-buying program

known as quantitative easing (QE).

The ECB had earlier this week embarked on a policy of buying up to 1.14 trillion euros (1.2 trillion) worth of bonds over the next 18 months with a view to pumping liquidity into markets so as to ward off deflation and spur growth in the single-currency area.

"We all know that QE is no panacea; it won't fix the problems of Europe, because only reforms can do that," Aviate Global Co-Founder Gary Paulin said in a statement. "But one thing we've learnt is that money printing is good for equity values."

hg/bk (Reuters, dpa, AFP)

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