Draghi pledges to save Europ's single currency; euro surges

FRANKFURT, GERMANY: European Central Bank head Mario Draghi promised on Thursday to do whatever it could to protect the European single currency and sent a strong signal that the central bank has the high borrowing costs that are crippling countries like Spain and Italy in its sights.

Draghi, speaking at a global investment conference hosted by the British government, said that the bank would ``do whatever it takes to preserve the euro'' and added, ``believe me, it will be enough.''

The euro soared to a two-week high against the dollar lifted by stronger risk appetite after a report showed the number of Americans filing new claims for jobless benefits fell last week to near a four-year low, a hopeful sign for a labor market that has shown signs of weakness.

The euro rose to a two-week high of $1.2329, using Reuters data, well above a session low of $1.2116 touched earlier in the global trading day before Draghi's comments. It was the euro's best one-day performance since June 29.

The euro also gained more than 1 percent against the Japanese yen to 96.17 yen. But analysts were skeptical the euro's gains would be sustained given worries about the possibility of Spain applying for a sovereign bailout or Greece leaving the monetary union.

Fears about the 17 countries that use the euro have intensified over the past few weeks. Spain and Italy, in particular, are finding it increasingly difficult to raise money on the debt markets due to spiraling borrowing costs. Spain's bond interest rates have hit record highs recently. That has raised fears the country may be the next to see a bailout from the other eurozone countries, after Greece, Ireland, Portugal and Cyprus.

Spain's economy, the eurozone's fourth largest, is much bigger than the other three countries combined and would strain the financing available to the eurozone's bailout funds.

In a question-and-answer session with global business leaders in London for the Olympics, Draghi discussed the high borrowing costs being imposed on some countries' bonds, saying that ``they come within our mandate'', as long as those costs stop the ECB's interest rate policies from being implemented across the eurozone.

Stocks across Europe rose on Draghi's comments. Britain's FTSE traded up 1.7 percent, Germany's DAX index rose 2.9 percent and France's CAC 40 rose almost 4 percent. Spain's main IBEX stock index rose 5.5 percent while Italy saw a 5.4 percent rise in its stock prices.