By Riva Gold 

Stocks extended a winning streak on Thursday, while government bonds came under pressure after the European Central Bank extended its asset purchase program but at a lower volume than expected.

Futures suggested U.S. stocks would open 0.1% higher, after major bourses closed at fresh records in their steepest best day since the presidential election.

The Stoxx Europe 600 wavered but quickly rebounded to trade up 0.6% after the ECB said it would extend its bond-purchase program by nine months to the end of 2017, but would reduce its monthly purchase volume from EUR80 billion ($86.2 billion) to EUR60 billion as of April.

Investors were looking ahead to the ECB's press conference with President Mario Draghi for further details on changes to the parameters of its asset purchase program, amid concerns the bank is running out of bonds to buy.

The euro strengthened slightly to trade up 0.4% at $1.0798 after the decision but quickly shed most of its gains and was last flat at $1.0756.

Yields on 10-year German bunds shot up to 0.449% from around 0.385% ahead of the decision, while Italian yields rose to 2.050% from 1.968%.

"Even without calling this tapering, the ECB just announced tapering," said Carsten Brzeski, chief economist at ING.

Recent comments from ECB officials had emphasized the importance of preserving stimulus, a message that bond investors appeared to have taken to heart. Riskier European debt and Italian debt had rallied earlier this week despite the concerns emanating from the Italian referendum, a move some attributed to expectations for an extension of quantitative easing.

Even as inflation remains shy of the ECB's target, eurozone economic data have been better than forecast recently, and the euro has weakened against a rising dollar, alleviating some of the pressure for further stimulus measures.

"This is their last hurrah," said Jordan Rochester, strategist at Nomura.

The moves also come amid a global selloff in long-dated government bonds on expectations that U.S. policy will be reflationary. The yield on the 10-year U.S. Treasury note was last at 2.408% from 2.347% on Wednesday.

Investors have bet that the Trump administration will bring about tax cuts, deregulation and fiscal stimulus, supporting growth and inflation in the world's largest economy and buoying U.S. stocks while pressuring government bonds.

"The promise of fiscal policy is certainly encouraging. but we have to discern the difference between posturing and policy from our president-elect," said Eric Wiegand, portfolio manager at U.S. Bank Wealth Management. "Tax policy and trade policy are very big issues for us, and we're anxious to get a sense of actual policy."

Markets in Asia closed higher earlier Thursday after a rally on Wall Street sent both the S&P 500 and Dow Jones Industrial Average to record highs.

Health care was the only S&P 500 sector to decline Wednesday, while Pfizer Inc., Johnson & Johnson and Merck & Co. were the only three stocks in the Dow to lose ground, following comments on drug pricing from President-elect Donald Trump.

Those moves were echoed in Europe on Thursday, with the health care sector down 0.4% even as wider markets advanced.

Earlier, Japan's Nikkei Stock Average rose 1.5% on Thursday, while Australian stocks added 1.2%.

Markets in Hong Kong added 0.3% while Shanghai stocks fell 0.2% with sentiment subdued in Chinese markets by authorities' increased scrutiny of aggressive stock purchases by some insurance companies.

Tom Fairless and Kenan Machado contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

December 08, 2016 08:43 ET (13:43 GMT)