Business

The Toronto stock market headed for a strong advance Thursday after the president of the European Central Bank announced a bond buying program designed to help alleviate higher borrowing costs that have squeezed the most vulnerable members of the eurozone, including Spain and Italy.

The program is called monetary outright transactions and will see the ECB buy up sovereign bonds on the secondary bond market, where previously issued securities are traded.

The Canadian dollar was up 0.55 of a cent at 101.47 cents US.

Draghi said the program will have no set limit and be a "fully effective backstop."

Countries that want the ECB to buy their bonds must first officially ask for help from Europe's bailout funds and agree to "strict and effective" budget policy conditions.

Spain and Italy have been forced to pay yields in the seven per cent range on their benchmark 10-year bonds this year, a level that raised worries those countries could be forced to seek a bailout, following a path taken by Greece, Ireland, Portugal and Cyprus.