ECB rate cut helps but summit concerns weigh
By Richard Hubbard
LONDON (Reuters) - World stocks and the euro gained slightly on Thursday after the European Central Bank cut its main interest rate to a record low, but fears for what may emerge from a crucial EU leaders summit aimed at quelling the bloc's debt crisis limited moves.
The ECB's 25 basis point rate cut was in line with market expectations and confirms growing concerns over the impact of the euro zone debt crisis on the region's economic outlook.
German bond futures pared gains immediately after the rate cut and U.S. government debt prices turned slightly lower, while the euro rose. The MSCI All-Country World Index .MIWD00000PUS was barely changed while Europe's FTSEurofirst 300 .FTEU3 pared gains slightly to stand up 0.4 percent.
U.S. stocks looked set to open moderately lower.
"There is nothing to get excited about with this decision, it was very much as expected," said Michael Derks, chief strategist at FX Pro.
Interest will now focus on what new ECB president Mario Draghi has to say about help for the region's troubled banks, and on its plans to buy bonds issued by the euro zone economies struggling with high debt.
Draghi's comments will set the stage for a critical euro zone summit that starts with a dinner on Thursday night.
Officials have told Reuters European Union leaders are likely to decide to bring forward the launch date of the euro zone's permanent bailout fund, the European Stability Mechanism (ESM), to 2012 from the initially planned mid-2013. [nL5E7N82HM] A proposal to give the ESM a banking license was said to be off the table. Continued...