By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets rallied on
Thursday after the European Central Bank unexpectedly cut its key
lending rate to a record low.
The Stoxx Europe 600 index jumped 1.2% to 327.03, after trading
around the flat line ahead of the announcement.
Markets in Europe spiked after the ECB surprised them by cutting
its benchmark interest rate, the refi rate, by a quarter of a
percentage point to a record low of 0.25%. Analysts had speculated
about whether the central bank would cut rates at its meeting on
Thursday after the release of weak euro-zone inflation data last
week, but most market participants expected no action until
December.
Attention now turns to ECB President Mario Draghi's news
conference, set to begin at 1:30 p.m. London time, or 8:30 a.m.
Eastern time.
"ECB Chief Mario Draghi today showed he is quite different from
former ECB head Trichet, pulling out a surprise like this from time
to time. High unemployment in the region also another likely
contributor to today's rate cut," said Ishaq Siddiqi, market
strategist at ETX Capital, in a note.
"The tone of the conference is likely to be dovish, with Draghi
justifying the move, which has knocked the euro currency sharply
lower against rivals," he added.
The euro (EURUSD) sank to $1.3370, down from $1.3519 late
Wednesday.
The Bank of England on Thursday left the size of its bond-buying
program unchanged and kept its key lending rate at a record low of
0.5%, where it has stood since March 2009.
Germany's DAX 30 index jumped 1.3% to 9,153.26. France's CAC 40
index climbed 1.3% to 4,342.19, while the U.K.'s FTSE 100 index
rose 0.4% to 6,768.28.
Among notable movers in Europe, shares of Commerzbank AG rallied
12% after the German lender reported better-than-expected profit
for the third quarter, boosted by improvements in cost cutting, a
lower tax rate and lower loan-loss provisions. The main revenue
driver, net interest income, also exceeded expectations.
Siemens AG (SI) climbed 5.4% after the industrial major reported
a slight drop in fiscal fourth-quarter profit, but announced plans
for a share buyback.
On a more downbeat note, HeidelbergCement AG lost 3.7% after the
cement maker said it will become tougher to reach its financial
targets as currency effects are weighing on operating income.
At 1.30 p.m. London time, the first estimate of third-quarter
gross-domestic-product growth in the U.S. is due out. Although
economists surveyed by MarketWatch predict the U.S. economy likely
expanded by 2.3%, some see growth as high as 2.7%, while others
predict 1.7% or even less.
U.S. stock futures pointed to a higher open on Wall Street.
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