THE euro hung onto hefty gains in Asia on Friday after the European Central Bank (ECB) eased aggressively but suggested it was running out of room to cut interest rates, even if other stimulus options remained.

    The muddled message sent European bond yields surging and snuffed out a nascent rally in risk sentiment, leaving Asian share markets at a loss on how to react.

    MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.32 percent while Australia dithered either side of flat.

    Japan’s Nikkei took a blow from a rise in the yen and slipped 0.9 percent, though that was above early lows.

    Shanghai stocks eased 0.8 percent while China’s central bank underlined its commitment to a firm yuan by fixing the currency at the high for this year.

    Markets went on a wild ride overnight after ECB chief Mario Draghi suggested there were limits to negative rate policy.

    Draghi was quick to note that new facts could change the outlook and emphasized his willingness to adopt other radical measures, but by then the damage was done.

    Euro debt markets moved instantly to price out further easing and pushed up rates across the curve.

    At one point, German 10-year yields doubled from a low of 16 basis points to a peak of 32 basis points, a staggering move for a benchmark long-term bond.

    The euro was enjoying the view at US$1.1180, having climbed from a trough of US$1.0820 to a peak of US$1.1217 Thursday, a truly vicious move that would have stopped-out both bulls and bears and left everyone nursing losses.(SD-Agencies)