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REUTERS
London, Oct 16: A surprise late-night interest rate cut from the U.S. Federal Reserve set the stage for a powerful rally in European stocks today, with bonds and the mark also seen rising, traders and analysts said.
Wall Street surged after the Federal Reserve cut rates for the second time in less than a month to ease the growing credit crunch.
The move raised hopes that the Bundesbank and the European Central Bank would ease their hardline stance and follow suit.
European goevernment bonds were higher across the board, and gold pushed back through the key $300 an ounce level.
"The move by the Fed is sending an indication of how worried they are. I'm sure there'll be more interest rate cuts in the weeks and months ahead," said an independent London-based analyst Neil Mackinnon.
It was the first time since 1994 that the Fed had moved rates between the regular meetings of its rates-setting committee and the decision took investors by surprise.
"It was a desperate measure, but these are desperatetimes," said a British equity strategist.
The Fed's move sent the Dow soaring 4.1 per cent, Brazil 6.7 per cent, Hong Kong up 7.5 per cent and Japan up 2.2 per cent. Germany opened European stock trade with the electronic Xetra Dax in Frankfurt surging four per cent.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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