The euro rebounded yesterday after the head of the European Central Bank, Mario Draghi, moved to quell growing talk that the ECB was considering an unprecedented policy of making banks pay to deposit cash overnight in a bid to boost economic activity.

Meanwhile, US stocks rose as the latest economic data suggested the Federal Reserve would not begin to slow its stimulus soon, although conflicting views over the issue limited gains globally.

An indication the Fed may be ready to scale back its $85 billion a month in stimulus had weighed on equities on Wednesday and drove the dollar to a more than four-month high against the yen earlier yesterday. But the US central bank repeated it will not taper until the economy can stand on its own and interest rates will remain low well after stimulus is cut back.

Data on factory activity in November in the US mid-Atlantic region indicated the economy continues to struggle to gain traction. The Philadelphia Federal Reserve Bank yesterday reported its business activity index fell to its lowest level since May.

The rally on Wall Street failed to translate overseas.

European shares were little changed near five-year highs, with investors finding few reasons to keep pushing prices higher.

Equity markets were also pressured by surprisingly weak data from China and the eurozone, which outweighed upbeat comments from the Bank of Japan as it left its massive stimulus policy in place.

Soon after Draghi’s comments, the euro was up 0.1 per cent at $1.3458. It had started the day weaker on views the Fed could scale back its stimulus earlier than consensus forecasts, which had been pointing to March.

Earlier, the dollar had been on the front foot and world shares had been under pressure from the Fed talk, triggered by the release of minutes from the last policy meeting on Wednesday.

Minutes showed officials felt there was room to scale back the bank’s bond purchase program at one of their next meetings, if economic conditions warranted it.

That shift in perception caused a big spike in US bonds yields, boosting demand for the dollar, which hit a four-month high of 100.99 yen, up one per cent on the day.

The US dollar index, which measures the dollar against a basket of currencies, was flat.

The benchmark 10-year US Treasury note was unchanged in price, with the yield at 2.7915 per cent.