ECB buying of euro zone debt eases market panic

ECB buying of euro zone debt eases market panic : The euro's rebound from a 2-½ month low stalled on Friday, though it retained most gains made after talk of European Central Bank buying of euro zone periphery debt helped knock down those yields. The immediate focus of the market moved to U.S. payrolls data later in the day, with a surprisingly strong U.S. housing number adding to budding optimism on the U.S. economy.

The euro nestled at $1.3220 EUR=, little changed on the day and floating well above a 2-½ month low of $1.2969 plumbed on Tuesday in the wake of massive selling in euro zone periphery government bonds. "I suspect the euro has bottomed out in the near term and will test $1.33-34," said a trader at a Japanese brokerage house.

Its 100-day moving average, at around $1.3327, is seen as the next resistance level. More important resistance lurks in the $1.3334-64 area, its August peak and a 38.2 percent retracement of its June-November rally.

Traders said the ECB was buying Portuguese and Irish debt on Thursday, calming investor panic over euro zone debt for now, helping the single currency.

The sharp fall in the yields of Spanish, Portuguese and other countries' bonds offset initial disappointment after ECB President Jean-Claude Trichet did not explicitly commit the bank to ramping up bond buying. [ID:nLDE6B10I4]

As widely expected, the ECB extended nonstandard provisions, committing to provide unlimited one-week, one-month and three-month funding for vulnerable banks until at least April. For the latest updates PRESS CTR + D or visit Stock Market news Today

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