Franc drops as Swiss announce negative rates; stocks jump after Fed

LONDON (Reuters) - The Swiss franc tumbled on Thursday after its central bank announced a charge on deposits, wary of a flood of money exiting Russia and likely inflows from the euro zone if the ECB starts full-scale money printing early next year.

European shares rose sharply after an upbeat assessment of the U.S. economy and a promise by the Federal Reserve to be patient in raising rates, which led U.S. stocks to their strongest session of the year.

The jitters of recent weeks calmed a touch as oil rose for a second day, although the pressure was still on Russia's rouble as Vladimir Putin tried to cool worries of a full-on financial crisis taking hold.

The Swiss National Bank's surprise move to introduce a charge on deposits was accompanied by a cut in its main rate band. The franc fell to its lowest since mid-October against the euro and to a two-year low against the dollar .

In a thinly veiled reference to Russia's recent woes, the SNB said in a statement, "Over the past few days, a number of factors have prompted increased demand for safe investments."

"The introduction of negative interest rates makes it less attractive to hold Swiss franc investments."

European stocks <.FTEU3> were riding high from Wednesday's reassurance by the U.S. Federal Reserve that it would be "patient" with rate hike and would not move for "at least a couple of meetings", meaning April of next year at the earliest.

London's FTSE <.FTSE>, Frankfurt's DAX <.GDAXI> and Paris' CAC40 <.FCHI> were up 1, 2.1 and 2.5 percent respectively and euro zone periphery bond yields nudged lower as the appetite for risk picked up. [GVD/EUR]

There was a hint of caution in Greek markets where stocks fell 2 percent <.ATG> after the government was left around 20 votes short in the first round of voting in parliament to elect a new president.

The government needs to get its candidate through to avoid snap elections early next year that polls suggest would be won by the leftist Syriza party, which promises to renegotiate the bailout deal Greece still needs to keep its finances afloat.

ROUBLE TROUBLE

Russia's rouble gave back some of Wednesday's recovery despite Putin seeking in his end-of-year news conference to calm worries that the near 45 percent plunge in the rouble since June has left the country on the brink of a full-blown crisis.

The rouble was roughly 1.5 percent weaker on the day , though Moscow's dollar-traded stock market <.IRTS> surged close to 8 percent and Russian bond spreads over U.S. treasuries were down around 100 bps from the 5-1/2 year high hit this week.

"Clearly the current situation is caused mainly by external factors," Putin said, referring to the slump in oil and gas prices.

"If the situation develops unfavorably, we will have to amend our plans. Beyond a doubt, we will have to cut some (spending). But a positive turn and an exit from the current situation are inevitable."

With risk appetite on the rise, Wall Street was expected to build on Wednesday's 2 percent rally [.N] with another 1 percent rise when trading resumes later.

In terms of data, economists are hoping PMIs, the Philly Fed business index and jobless claims figures will all bolster the Fed's view that the upward trend for the U.S. economy remains on track.

OIL BOUNCE

In Asia, Japan's Nikkei <.N225> had jumped 2.3 percent while stocks in Australia <.AXJO> climbed 1.0 percent as the region tracked Wall Street's gains.

Back in the currency market, the euro had retreated to $1.2307 , after being as high as $1.2515 at one stage on Wednesday, while the U.S. dollar index settled after a 1 percent rise <.DXY>.

The single currency took a hit when European Central Bank board member Benoit Coeure said there was support on the bank's policymaking council for more action, with sovereign bond purchases the "baseline option".

Beaten-up oil prices were also steadier after some wild swings this week. U.S. crude and Brent rose for a second day running, to $57.73 and $62.77 respectively, having bounced as far as $58.98 and $68.71 the previous day. [O/R]

Safe-haven gold rose 2 percent, but U.S. bond investors were less enthused as some had thought the downward spiral in oil combined with low inflation, economic weakness globally and the Russian financial crisis would lead the Fed to push out the likely timing of the first hike.

Instead Fed Chair Janet Yellen played down the impact of oil and falling inflation expectations, while most policy members still expected hikes to start in 2015.

As a result, investors continue to wager that any tightening will proceed at a snail's pace. Fed fund futures <0#FF:> currently imply a rate of 0.56 percent by the end of 2015, while the median forecast by Fed members is 1.125 percent.

(Reporting by Marc Jones; Editing by Hugh Lawson)

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