Markets closed on Thursday in Europe’s fourth-biggest economy, with investors seeking more clarity on the European Central Bank’s interest rate policy.
The benchmark ESRB rate was last raised in December.
European stocks and bonds were higher on Thursday as investors continued to look for a more positive outlook ahead of a major euro-area trade agreement between the bloc’s 28 countries and the U.S. The Dow Jones Industrial Average rose nearly 7 percent, the S&P 500 index rose nearly 1 percent and the Nasdaq Composite added more than 1 percent.
Europe is facing an unprecedented financial crisis, with banks in the region struggling to lend to each other as banks are shutting down.
The central bank on Wednesday cut the interest rate on banks’ long-term debt to minus 0.75 percent from minus 1.0 percent, to ease the pressure on countries struggling to repay the trillions of euros in outstanding debts.
The ECB also cut its interest rate for short-term government bonds from minus 0-0.75 to minus 1-1.0, a move that should ease a crisis-hit economy that is struggling to meet the needs of its aging population.
At the same time, a major trade agreement involving the U,S.
and other major trading partners is in the works that would allow the bloc to move to a single currency with no future change to the rules governing trade.
“There is a lot of optimism that this is going to be the breakthrough that is needed to end this long economic crisis,” said Andrew Weisberg, chief investment officer at London-based hedge fund D.I.G.
The euro fell to $1.079 from $1 and the dollar to 69.98 against the greenback, while the dollar rose 0.6 percent against the yen.
U.S.-listed shares were off more than 2 percent at $3.18, while Germany’s DAX index rose 0% and France’s CAC 40 rose 0%.
In a surprise move, the ECB’s monetary policy committee raised its benchmark interest rate by a quarter point from minus 2 percent to minus 3.25 percent.
That move is seen as a sign of support from the ECB, but it does not necessarily signal the start of a new round of quantitative easing. More: