Investec have sent over a handy explanation of the tweaks that the ECB is making to its asset purchase plan (announced early in today’s press conference):

The change will see the Public Sector Purchase Programme issue share limit raised from 25% to 33%, except where the Eurosystem would have a blocking minority.

This change appears to be aimed at reinforcing views that the ECB maintained full control over its purchases and could work easily around market impediments; indeed Mr Draghi said it was meant to ensure the continued smooth functioning of the programme.

We note that Germany in particular could have found itself running up against the 25% limit, so the adjustment today should support the ECB, for example, in buying its full allocation for Germany.

Ranko Berich, Head of Market Analysis at Monex Europe, reckons the European Central Bank will set sail on QE2 soon, following today’s “unambiguously dovish” press conference:

“Draghi presented a double-whammy of pessimism, with additional downside risks from recent market volatility adding to the already downgraded growth and inflation forecasts.”

Should we see the very real risks of free-falling commodity prices and a weakened growth outlook begin to weigh down on inflation prospects, Draghi has shown his intention to act by altering the duration, composition, or size of QE.

Unless some upside price pressure materialises, the ECB will be forced to follow the Fed and Bank of Japan in a second QE programme.”

Enrique Diaz Alvarez, Chief Risk Officer and Currency Expert at Ebury, predicts that the euro will continue to weaken in the months ahead.

Here’s why:

“The ECB is committed to easier monetary policy, and today’s press conference has reaffirmed that this commitment explicitly includes a lower euro.

“While there were no changes to the ECB policy stance, President Draghi sent the Euro sharply lower right at the start of the press conference with comments and projections that were extremely dovish.

“He specifically mentioned a weaker Euro as a key lever to the European economic recovery. Inflation and growth forecasts were also slashed, with Draghi suggesting that we may see negative inflation again soon.

“In light of this, our view is that the common currency will resume a gently depreciating path against most other major currencies over the coming months, particularly against the US dollar.”

Mario Draghi’s ability to move the markets without actually doing anything has left Marc Ostwald of ADM Investor Services shaking his head in admiration.

The sleight of hand in terms of a renewed dose of ‘all talk and no action’ was once again masterful, above all in emphasizing the ECB’s dovishness and hefty easing bias.

However, the ECB hasn’t actually discussed extending QE today, Ostwald points out.

Wall Street has also welcomed Mario Draghi’s pledge to take more stimulus measure if needed.

The Dow Jones industrial average, and the broader S&P 500, are both up by almost 1%.

A slice of birthday cake for CNBC’s Carolin Roth, who wishes Draghi a happy birthday.

She also gets Draghi to talk about China -- he explains that the slowdown of the Chinese economy will have an impact on trade channels across the globe.

He’ll be pushing Chinese officials for answers at the G20 meeting this weekend.

And that’s the end of the press conference. I’ll pull together a summary and some instant reaction now.

Francesco Papadia, a former senior official at the ECB, puts Draghi’s last comments into context:

Why are European countries struggle to achieve close integration?

These countries fought for centuries, Draghi replies. But after the second world war, they all recognised that integration was fundamentally a political process designed to guarantee permanent peace in Europe.

The union isn’t perfect. More progress is needed towards fiscal integration, but each crisis pushes Europe closer (he cites the Five Presidents’ report, which proposed a common eurozone treasury)

There was no discussion about expanding QE today, Draghi insists. No-one on the governing council wanted to do it.

We didn’t discuss whether interest rates have reached the ‘lower bound’, says Draghi.

They are currently at record lows, of course, with eurozone banks already paying negative interest rates on their deposits at the ECB.

Back to China. Draghi says the ECB “took note” of the devaluation of the yuan last month (I bet they did!).

He expects to hear more details at the G20 meeting of central bankers and finance chiefs this weekend.

Is the worst of the market turbulence over, or does the ECB expect more volatility?

Draghi says we must wait to see whether the last few weeks is short-term volatility, or permanent volatility. The latter would increase risk premia, and mean that today’s forecasts on growth and inflation may be too optimistic.

Right now, we don’t know for sure.

The ECB hasn’t discussed how it could expand its QE programme, says Mario Draghi. We’re not there yet.

The ECB has also cut the emergency support provided to Greece today, from €89.7bn to €89.1bn.

Don’t worry, though. That’s an encouraging sign, as it means there is more liquidity coming back into the banking sector.

Draghi thinks the ECB announced it before the press pack sniffed it out. Bloomberg begs to differ.....

Onto Greece.

Draghi confirms that the ECB insisted that Greek bank depositors were protected from any haircuts on their savings.

Could the ECB reinstate the ‘waiver’ that allowed it to buy Greek bonds despite the low credit rating?

That can’t happen unless a country is in a bailout programme, and complying with it, Draghi replies. And there must be a debt-sustainability analysis.

That suggests Greece must wait for the first review of its third bailout (once it has got this month’s election out of the way)

Is the ECB chasing the wrong inflation target (close to, but below 2%)?

Draghi says the governing council hasn’t discussed whether the target is still appropriate.

And on the strength of the euro, he says the exchange rate isn’t a policy target, but it is very important for price stability and growth.

That looks like a sabre-rattle in the direction of the Currency Wars - if so, it worked, as the euro keeps falling:

He adds that

This press conference is much less cheerful than the one in mid-July.

Mario Draghi then drops another big hint that the ECB could expand its bond-buying programme beyond September 2016.

Our new forecasts were drawn up on August 12, Draghi explains. That’s shortly before China’s Black Monday, which roiled stock markets worldwide.

Thus, there are downside risks to the current forecasts, meaning growth could be even weaker and inflation even lower.

European stock markets are surging, as traders anticipate further stimulus measures from the ECB:

Over at the Frankfurt stock market, the German DAX has jumped by 217 points, or over 2%. A weaker euro is very good news for German exporters.

Onto questions:

Q: What’s the downside risk to the ECB’s forecasts of 0.1% inflation rate this year? And what more can you do about it?

Draghi replies that we could see negative inflation prints in the months ahead, but due to lower oil and commodity prices rather than full-blown deflation.

And the Governing Council is committed to doing everything in its power, he reiterates.

The euro has fallen by almost one cent against the US dollar during Mario Draghi’s statement.

Analysts say Draghi has just announced a small, but significant, tweak to the ECB’s QE programme

Mario Draghi’s press conference is being streamed live, here:

Mario Draghi is a tricky man to predict, so traders who expect strong hints about more stimulus measures could be disappointed.

Brenda Kelly of London Capital Markets reckons Draghi will probably “keep his powder dry” until we get more clarity about the global economy, and learn whether the US raises interest rates this month.

She warns:

President Draghi’s dovishness could fall short of market expectations and surprise the looming ECB doves by pushing the euro higher against the US dollar and pound.

Here’s the official announcement:

Wall Street is expected to join the rally in a few hours time:

US equity market calls (via CMC Markets)

• S&P 500: 10 points higher at 1,958
  
• Dow Jones: 76 points higher at 16,427
  
• Nasdaq 100: 31 points higher at 4,287
  

The Economist Intelligence Unit predicts that Mario Draghi will hint at further moves to ease monetary policy at this afternoon’s press conference.

They reckon the ECB’s bond-buying programme, due to end in September 2016, could be extended by almost another year. By then, though, European politicians must have implemented serious reforms.

Despite today’s rally, European markets are still sharply lower than one month ago - before fears over the global economy rattled investors.

While Europe picks up pace, Britain’s service sector growth has slowed to its slowest rate in 27 months.

The UK services PMI dipped to 55.6 in August, from 57.4, suggesting the recovery weakened last month.

That’s still shows quite solid expansion. But with manufacturing growth also slowing in August, Markit predicts overall growth of just 0.5% this quarter, down from 0.7% in April-June.

The increase in eurozone private sector growth means even less chance that the ECB will announce new stimulus measures today.

So argues Bloomberg economist Maxime Sbaihi, who predicts plenty of questions about China at this afternoon’s press conference:

Not for the first time (or the last, I fear), Germany’s economy has outperformed France.

The German service sector PMI rose to 54.9 last month, from 53.8 in July, indicating faster growth.

Companies reported an increase in output and new business, meaning they could hire more staff and even raise prices. That last point will please the ECB as it wonders if inflation can pick up.

Less encouragingly, France’s service sector came off the boil last month and only reported modest growth:

Now this is encouraging -- Italy’s service sector just grew at the fastest pace since the early days of the financial crisis.

The Italian Services PMI, which tracks activity across the sector, jumped to 54.6 in August, from 52.0 in July.

Markit reports that:

• Business activity increases at solid and accelerated pace
• Employment returns to growth, rising modestly

However, business expectations weakened to their lowest level this year.

Budget airline easyJet is leading the FTSE 100 risers in London.

Shares surged by almost 7%, after raising its profit forecasts and reporting record traffic levels in August.

Spain’s services companies have posted another month of solid growth, as its economy continues to recover.

The Spanish Services PMI came in at 59.6 in August, down very slightly on July’s 59.7 but still a strong result (any reading over 50 shows growth). Measures of new business and job creation remained robust too.

Overnight, the International Monetary Fund has warned that the downside risks to global growth have risen, partly due to the slowdown in China.

In a new report, ahead of the G20 finance ministers meeting in Ankara this weekend, the Fund said:

Near-term downside risks for emerging economies have increased, given the combination of China’s growth transition, lower commodity prices, potential adverse corporate balance sheet and funding challenges related to a dollar appreciation, and capital flow reversals and disruptive asset price shifts.

The IMF also warned that global interest rates may have to stay low for even longer -- a signal to the Federal Reserve not to hike borrowing costs this month?

Most mornings recently, we’ve been glued to the twists and turns on the Chinese stock market. Not today, though.

The Shanghai index is closed until Monday, so Beijing could hold a parade to mark its victory over Japan and the end of the second world war. And what an event it was, with masses of tanks, planes and troops on display.

Russia’s Vladimir Putin was there too; Britain, curiously, was represented by Ken Clarke MP, the long-serving former minister.

My colleague Claire Phipps live-blogged the whole thing:

And Tom Phillips tweeted from Tiananmen Square:

After some tough days, Asia’s markets are staging a modest recovery today.

Japan’s Nikkei jumped by 0.7%, following three days of losses, and there are also gains in South Korea and India.

But there are still concerns over how the region will fare, given the turbulence in China.

Angus Nicholson of IG reports “growing concern” about the Japanese banking sector, which may have made some reckless loans.

In the face of poor growth prospects in Japan, banks aggressively began lending to emerging Asian nations. With the massive falls seen in emerging market currencies over the past twelve months or so, defaults on these loans have been soaring. This is likely to be a major headwind to the performance of the Nikkei over the coming months as well.