Markets rally after surprise rate cut by ECB

Associated Press
A man looks at an electronic stock indicator outside a securities firm in Tokyo, Thursday, Nov. 7, 2013. Asian stock markets were mostly weaker Thursday, with a cautious mood prevailing ahead of key U.S. data that will provide further clues on when the Federal Reserve will cut monetary stimulus. Japan's Nikkei 225 shed 0.7 percent to 14,238.95. (AP Photo/Junji Kurokawa)
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A man looks at an electronic stock indicator outside a securities firm in Tokyo, Thursday, Nov. 7, 2013. Asian stock markets were mostly weaker Thursday, with a cautious mood prevailing ahead of key U.S. data that will provide further clues on when the Federal Reserve will cut monetary stimulus. Japan's Nikkei 225 shed 0.7 percent to 14,238.95. (AP Photo/Junji Kurokawa)

LONDON (AP) — Stock markets rallied and the euro slumped Thursday after the European Central Bank unexpectedly cut its key interest rate.

A string of weak economic figures had raised pressure on the ECB to take action this week but most analysts were expecting it to hold its fire, at least until next month, when it will have its staff forecasts.

Major European benchmarks jumped on the news of the cut after trading had been muted earlier. Germany's DAX rose 1.2 percent to 9,150.09 while France's CAC-40 jumped 1.1 percent to 4,336.57. The euro fell to $1.3329 from $.13520 before the announcement.

All eyes will now turn to the press conference by ECB President Mario Draghi for an explanation of the move.

Britain's FTSE 100 was up 0.4 percent to 6,770.30 after the Bank of England held its own interest rates unchanged.

Futures pointed to a stronger open on Wall Street, where Twitter will start trading following an initial public offering that valued the social network at $18 billion. S&P 500 and Dow Jones futures were up 0.4 percent and 0.5 percent.

Investors are also waiting for the release of the advance estimate of U.S. third quarter economic growth later Thursday and October jobs figures on Friday.

Both reports could signal how much longer the Federal Reserve will continue its bond purchases at the current rate of $85 billion a month. That program has held down interest rates, kept bond yields low and made stocks more attractive for investors.

Earlier in Asia, Japan's Nikkei 225 shed 0.8 percent to 14,228.44 and Hong Kong's Hang Seng lost 0.7 percent at 22,881.03. China's Shanghai Composite fell 0.5 percent to 2,129.40 and Seoul's Kospi dropped 0.5 percent to 2004.04.

Benchmark crude for December delivery was up 7 cents at $94.87 in electronic trading at the New York Mercantile Exchange. The contract rose $1.43 to close at $94.80 a barrel on Wednesday.

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