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NEW YORK — The euro rose against the dollar Thursday after the European Central Bank announced a plan to provide banks with dollar loans, easing growing tensions about the eurozone's financial sector.
The news was well-received by investors. Besides the euro, global markets and stocks of foreign banks rallied. The Dow Jones industrial average was up more than 120 points by Thursday afternoon.
The ECB said it launched the plan in coordination with the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank.
The euro has fallen about 3.4 percent against the dollar since the beginning of the month on worries that banks would have trouble getting short-term loans from each other. Fears have also intensified that Greece would default on its debt. Analysts say the ECB program is helping reduce those fears.
In late trading, the euro rose to $1.3889 from $1.3753 late Wednesday. The British pound rose to $1.5809 from $1.5774.
The program comes a day after two big French banks, Societe Generale and Credit Agricole, had their credit ratings lowered by ratings agency Moody's on their exposure to Greek and other risky debt.
Joseph Trevisani, chief market analyst at FX Solutions, said the move shows that the ECB is committed to doing anything to keep the European Union intact.
Early this week, Germany's economy minister said an "orderly default" for Greece shouldn't be ruled out. However, Trevisani said the ECB program makes it seem less likely that the central bank, the European Commission and the International Monetary Fund will allow Greece to default. The three organizations will be reviewing Greece's financial progress in the coming days to see if it has enacted reforms needed to receive its next payment from last year's $151 billion bailout package.
In other trading, the dollar fell to 0.8697 Swiss franc from 0.8760 Swiss franc and to 98.40 Canadian cents from 98.97 Canadian cents. Meanwhile, the U.S. currency rose to $76.64 Japanese from 76.62 Japanese yen.
