European Central Bank surprises with a 25 basis point rate cut
European shares soared on Thursday as financials traded sharply higher amid hopes that the worst could be past for the global economy.
The pan-European Dow Jones Stoxx 600 index jumped 2.8% to 184.20, led by sharp gains for beaten-down banks such as HSBC Holdings up 9.9%, and BNP Paribas up 7.7%.
"In any rally, those that have dropped the most recover the most, and that's typical of the first stage of a market rally," noted Edmund Shing, strategist at BNP Paribas.
Recent gains for European stocks have been on hopes of a stabilizing economy.
"We've had some relatively positive surprises....which lend credence to the fact that there are some signs of future stabilization in the world economy," noted Shing. "People are taking these on board and saying that maybe we're getting past the point of maximum pain," he added.
On a regional level, the U.K. FTSE 100 index (UK:UKX: news , chart , profile ) climbed back over the key 4,000 level, up 2.5% to 4,053.08. See London Markets story.
The German DAX 30 index (DX:1876534: news , chart , profile ) rose 3.7% to 4,286.84 and the French CAC-40 index (FR:1804546: news , chart , profile ) jumped 3.4% to 2,934.24.
Shares pulled back slightly after the European Central Bank cut its key interest rate by less than expected. The ECB cut its rate by 25 basis points to 1.25%. Many economists had been expecting a 50 basis point cut. Read more on ECB.
The euro traded up 1% to $1.3364 against the U.S. dollar after the ECB decision.
