By Tommy Stubbington 

Stocks on both sides of the Atlantic rallied and the euro fell after the European Central Bank announced a bigger-than-expected program of asset purchases to battle a flagging economic recovery and falling prices.

ECB President Mario Draghi said the central bank would buy EUR60 billion ($69 billion) of public and private sector debt every month until September 2016 in an effort to boost inflation back to its target of close to 2%. Although the introduction of a large-scale bond-buying program was widely expected, analysts and investors said the size was toward the upper end of expectations.

"The big news today is the long-awaited bazooka from the ECB. Draghi delivered," said Yoram Lustig, a fund manager at AXA Investment Managers.

Earlier, the ECB kept interest rates on hold at record lows, as expected.

Equity markets in Europe gained. The Stoxx Europe 600 added more than 1% to a fresh seven-year high.

U.S. stock futures indicated a 0.6% opening gain for the S&P 500. Changes in futures aren't necessarily reflected in moves after the opening bell.

The euro fluctuated after the announcement, before heading lower, trading down 1% against the dollar at $1.1477, close to its recent 11-year low.

The size of the proposed program "is above our and the market's expectations," said Andrew Bosomworth, head of portfolio management in Germany at Pimco.

Investors also welcomed Mr. Draghi's commitment to carry out bond purchases until inflation expectations in the eurozone pick up.

"Making the program open-ended is a bullish development," said Mark Dowding, co-head of investment grade at BlueBay Asset Management, which manages $65.8 billion of assets.

Bonds in the eurozone also rallied. German government bonds, which had weakened ahead of the announcement, bounced back, pushing 10-year yields down to 0.46%.

Spanish 10-year yields fell to a record low of 1.46%, while debt issued by Italy, Portugal and Greece also gained.

In the U.S., Treasury bond yields fell to 1.89%.

Write to Tommy Stubbington at tommy.stubbington@wsj.com