PARIS — Stocks rose Wednesday in Europe after a mixed session in Asia, while the price of gold hit a record as efforts to defend European countries from sovereign default raised concerns about the euro.
As part of a massive effort involving the European Union and International Monetary Fund to give European nations like Greece time to sort out their troubled finances, the European Central Bank said it would buy government and corporate bonds directly “to ensure depth and liquidity in those market segments which are dysfunctional.”
The central bank’s emergency move has led some investors to fear it will ultimately begin to monetize the debt of troubled euro-zone governments, in effect debasing the euro.
Comex gold for June delivery rose $20.80 to a record $1,241.10 an ounce. The price also reached record levels against the euro and the Japanese, Swiss and British currencies.
The E.C.B. president Jean-Claude Trichet reiterated on Wednesday the central bank’s intended to “sterilize” its actions, or drain the excess cash resulting from its government bond buying.
“We will not turn on the printing press,” he said on Europe-1 radio in France. “Our goal is stability of prices on the medium and long term.”
Bayram Dincer, a commodity analyst at LGT Capital Management in Pfaeffikon, Switzerland, said the rise in the gold price “reflects the fear factor.”
Inflation worries, historically a driving force in the gold market, “are well-anchored,” he said, pointing to a Bank of England report Wednesday that forecast British consumer prices would remain in check.
“Rather, the gold price rise shows fears about systematic risks,” he said, “the fear of investors that the system would break down. The price action suggests confidence in paper money, in fiat money, is weak.”
Mr. Dincer noted that after adjusting for inflation, the dollar gold price record would be closer to $2,300. However, he said the fundamentals did not support gold-buying much above the current levels.
“It’s unsustainable,” he said. “Investors may be losing touch with reality.”
In afternoon trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 0.5 percent, while the FTSE 100 index in London was flat. The CAC 40 in Paris gained 0.3 percent, and the DAX in Frankfurt rose 1.3 percent.
Trading in U.S. index futures suggested Wall Street stocks would open modestly stronger.
Despite the run-up in gold prices, credit markets were largely quiet. The cost of insuring European blue chip corporate debt against default with credit default swaps fell about 6 percent, according to the Markit Itraxx Europe index.
Government bond prices were little changed around the world.
U.S. crude oil futures for June delivery fell 31 cents to $76.06 a barrel.
The dollar was mixed against other major currencies. The euro was unchanged from late Tuesday at $1. 2662 late Tuesday in New York, while the British pound fell to $1.4909 from $1.4956. The dollar rose to 93.07 yen from 92.65 yen.
Asian shares were little changed. The Tokyo benchmark Nikkei 225 stock average fell 0.2 percent, while the main Sydney market index, the S&P/ASX 200, rose 0.6 percent. In Hong Kong, the Hang Seng index rose 0.3 percent, and in Shanghai the composite index closed 0.3 percent higher.
Economic growth reports Wednesday from across Europe failed to reassure investors that the region’s economies would be able to expand their way out of their debt troubles.
“The similarity among countries is striking given the huge divergence in their fiscal and financial market positions,” Jennifer McKeown, an economist in London with Capital Economics, wrote in a research note, adding that the data “confirm that the recovery was lackluster in the early months of the year.”
The 16-nation euro-zone grew 0.2 percent in the first three months of 2010 from the last quarter of 2009, or about 0.8 percent on an annualized basis,
Ms. McKeown said recent surveys of purchasing managers suggest euro-zone GDP “could rise by as much as 1 percent in the second quarter.” But she warned that “the impact of fiscal tightening has yet to come.
“With governments throughout the region forced to tighten their belts, the recovery will falter before long and a renewed recession looms in the periphery. We still see euro-zone GDP expanding by around 1.0 percent this year and just 0.5 percent next.”
