The Rally Keeps Chugging Ahead Of Europe's Big Refinance Auction

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Stocks are mostly up around the world ahead of the ECB’s second Long-Term Refinancing Operation auction at 5:15 EST.In Asia the Hang Seng rose 0.52 per cent, while the the Japan’s Nikkei and India’s Sensex eked out slight gains. India’s fourth quarter GDP slowed more than expected to 6.1 per cent.

In America, Dow futures point to a mildly positive open.

The ECB is expected to sell between EUR250 billion and EUR 600 billion.

It’s not clear what the market reaction would be to an upside or downside surprise. Merrill Lynch’s regional chief Bill O’Neill told the WSJ: “It will be interesting to see how the market reacts to a surprise either way: if banks are still stressed and in need of funding, a more modest outcome may be a better one for markets; but a larger number may be viewed positively should banks use the availability of unlimited financing to stock up on cheap peripheral assets and make profits on the ‘free carry’ being provided by the central bank.”

While the first LTRO auction late last year set off an extended stock rally, click here to see why LTRO-2 may be doomed to fail >

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