European stocks rally on Fed cut

European stocks rose after the US Federal Reserve cut interest rates in an emergency move to help thwart recession. Barclays Plc and BNP Paribas SA led gains by banks.

The Dow Jones Stoxx 600 Index rallied 0.8 percent to 311.26 as of 1:45 pm in London, after earlier dropping as much as 4.1 percent.

The central bank lowered the benchmark overnight lending rate to 3.5 percent from 4.25 percent, the Federal Open Market Committee said in a statement in Washington. Policymakers weren't scheduled to gather on rates until Jan 29-30.

"A cut of this kind is obviously helping the markets," said Philippe Gijsels, senior equity strategist at Fortis Global Markets, which manages $62 billion in Brussels.

"We will see a short-term relief rally especially in the financials."

National benchmarks advanced in all of the 18 markets in Western Europe except for Austria and Iceland. The United Kingdom's FTSE 100 jumped 0.6 percent, and France's CAC 40 increased 0.5 percent. Germany's DAX Index gained 0.1 percent.

The Stoxx 50 added 0.9 percent, and the Euro Stoxx 50, a measure for the euro region, increased 0.6 percent.

US stock-index futures tumbled on concern an emergency interest rate cut by the Federal Reserve will fail to halt a worsening global economic slowdown.

Exxon Mobil Corp, the largest oil company, and Barrick Gold Corp, the biggest gold producer, fell as crude and metal prices decreased.

Bank of America Corp declined after the second-largest US bank said earnings dropped 95 percent.

S&P 500 Index futures expiring in March retreated 40.5, or 3.1 percent, to 1,284.8 as of 8:36 am in New York after earlier slumping as much as 5.3 percent. The MSCI World Index fell 0.2 percent.

Agencies

(China Daily 01/23/2008 page17)