Euro, shares climb after ECB cut, Draghi awaited

Thu May 2, 2013 8:47am EDT
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By Marc Jones

LONDON (Reuters) - The euro and European shares rose on Thursday after the European Central Bank cut rates to an all-time low and investors waited to see whether it has plans for additional, less conventional support.

The cut was the ECB's first move in 10 months and took its main rate down to 0.5 percent from 0.75 percent.

It came as fresh data showed that euro zone manufacturing continued to deteriorate last month.

To avoid the complication of charging banks who have spare cash in the system, it left its deposit rate, which has become a truer reflection of its policy stance since it flooded markets with ultra-cheap cash, unchanged at zero, rather than negative.

European shares .FTEU3 and the euro both rose, while benchmark German bonds fell after the cut, but as the initial impact wore off attention turned to ECB chief Mario Draghi's post-meeting news conference at 8:30 a.m. ET to see what else, if anything, the central bank has up its sleeve.

"In our view, the balance of risks is tilted towards uncomfortably low inflation and the ECB should take further steps going forward to ease financial conditions," said ABN Amro economist Nick Kounis.

"In today's press conference, we think Mr. Draghi will hold out the prospect of an announcement about a scheme to help to ease financing conditions for SMEs (small and medium sized firms) as soon as the June meeting."

U.S. stock index futures added to gains after the ECB move, pointing to another firm start on Wall Street after this week's record highs for the S&P 500.   Continued...

A man walks through the lobby of the London Stock Exchange August 5, 2011. REUTERS/Suzanne Plunkett