LONDON — Global markets rallied Thursday after the European Central Bank's chief, Mario Draghi, vowed to save the 17-country euro from the financial crisis, possibly by intervening in markets to help weaker states like Spain. Markets have been rattled over the past few days by fears that Spain, the fourth-largest eurozone economy, could need a bailout along the lines of Greece, Ireland and Portugal because its borrowing rates are high. That would strain Europe's finances and potentially cause the break-up of the euro union. Draghi pledged that would not happen: “The ECB is ready to do whatever it takes to preserve the euro," he told a conference of investors in London. After insisting for months that it was up to governments to restore confidence in the eurozone, he suggested the ECB could now take action to lower the borrowing rates of financially weak countries like Spain and Italy. He said that because those countries' high borrowing rates hinder the ECB's role in controlling inflation in the eurozone, it is within the bank's mandate to try to get those rates back down. Market-watchers took the comment as an indication that the ECB is willing to once again intervene in markets to bring down government borrowing rates. “They hint at a possible attempt to circumvent the restrictions on outright government bond purchases," said Ostwald. The ECB has since 2010 bought government bonds to lower some countries' borrowing rates, but stopped because it feared it could be seen as direct support for governments — something it is prohibited from doing by treaty. Draghi's comments caused stocks, which had opened lower, to rally. Germany's DAX was up 1.6 percent at 6,509.79 while France's CAC 40 was 2.9 percent higher at 3,169.57. Britain's FTSE rose 1.2 percent to 5,566.71. The euro jumped 1.1 percent higher to $1.2295 and the borrowing rates for Spain and Italy fell sharply. — AP
