LONDON: European stock markets rebounded while the euro slumped after ECB chief Mario Draghi signalled that the time had not yet come to wind down unprecedented stimulus measures.
Meanwhile, the dollar shot higher after data showed construction of new homes surged and December and first-time claims for unemployment benefits fell in mid-January.
In the eurozone, Frankfurt's DAX 30 index rose 0.3 percent and the Paris CAC 40 added 0.1 percent in afternoon trading.
As predicted, at its first policy meeting of 2017 the ECB kept interest rates at record lows and made no changes to its asset-purchasing scheme, which is designed to encourage spending and investment in a bid to drive up growth and inflation.
The mass bond-buying programme is already scheduled to slow from 80 billion to 60 billion euros per month from April.
"I am pretty sure that it will come the time, (and) then we will have to have a very deep, very careful discussion and analysis of the situation. But we are not there," Draghi told reporters at a Frankfurt press conference.
However recent data have shown that inflation in the eurozone shot up to 1.1 in December, up from 0.6 percent in November, prompting critics to say the time for an exit from stimulus is approaching.
But Draghi was at pains to stress the jump was mainly down to rising oil prices, and that core inflation -- which excludes volatile energy and food prices -- remained weak.
He also emphasised that "risks coming from global uncertainty" could weigh on the region's fragile recovery, confirming the need "for a continued very substantial degree of monetary accommodation".
In Asia Thursday a weaker yen pushed up Japanese share prices, with optimism buoyed by remarks from US Federal Reserve boss Janet Yellen on the economy -- although traders moved cautiously before Trump's inauguration Friday.
Dealers took a speech by Yellen on Wednesday as a hint that US rates will rise further this year.
In the two months after Trump's November election victory, the dollar soared against all other currencies on expectations his big-spending, tax-cutting plans will fan growth, ramp up inflation and force the Fed to lift borrowing costs.
But growing uncertainty in the past two weeks, made worse by a lack of policy detail from the president-elect, has sent investors scurrying back out of the US unit until they see signs of firm plans.
However, Yellen breathed life back into the greenback Wednesday with a speech in which she said the US economy was meeting the central bank's inflation and employment goals, and was confident it would push on.
That view received confirmation with the positive housing and unemployment data on Thursday morning, sending the dollar higher. US stocks opened flat, however.
Oil prices meanwhile rose Thursday as energy watchdog the IEA said deeper cuts in OPEC oil production are likely this month as producers increasingly implement a recent key deal to tackle oversupplies.
- Key figures around 1450 GMT -
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London - FTSE 100: DOWN 0.4 percent at 7,216.59 points
Frankfurt - DAX 30: UP 0.3 percent at 11,629.34
Paris - CAC 40: UP 0.1 percent at 4,859.90
EURO STOXX 50: UP 0.5 percent at 3,302.68
New York - Dow: FLAT at 19,801.75
Tokyo - Nikkei 225: UP 0.9 percent at 19,072.25 (close)
Shanghai - Composite: DOWN 0.4 percent at 3,101.30 (close)
Hong Kong - Hang Seng: DOWN 0.2 percent at 23,049.96 (close)
Euro/dollar: DOWN at $1.0608 from $1.0629
Pound/dollar: UP at $1.2312 from $1.2258
Dollar/yen: UP at 115.26 yen from 114.65 yen
Oil - West Texas Intermediate: UP 63 cents at $52.52 per barrel
Oil - Brent North Sea: UP 59 cents at $54.51
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