Euro Stocks Rebound; Rate Cuts Expected

European stocks reversed early losses to rally on Thursday, rising for the third session in a row as investors hoped deep interest rate cuts would help soothe the global economic slump.

The FTSEurofirst 300 index of top European shares was up 1.3 percent at 841.05 points.

Sweden became the latest country to aggressively cut interest rates, slashing its key interest rate by a record 175 basis points to 2.00 percent on Thursday, a shock move to try and prevent the economy from sliding deeper into recession.

The European Central Bank is due to announce a rate decision at 12:45 pm London time while the Bank of England delivers its verdict at 12 pm London time.

A Reuters poll taken last week showed 24 of 81 economists forecast an ECB rate cut of 75 basis points or more.

The majority believed the ECB will cut rates by 50 basis points, with more cuts to come next year.

"Will (the) ECB become a fashion victim? We have discovered a new central bankers trend: cutting interest rates by 100 bps ... These interest rates cuts were huge and unexpected. On this latest news, we expect ECB to cut by 100 bps," Oddo Securities analysts wrote in a note.

The Bank of England is also forecast to cut by 100 basis points.

Food and beverage stocks were among the biggest gainers, with Nestle up 1.8 percent and Diageo up 4.9 percent.

Credit Suisse rose 6 percent despite the Swiss lender cut jobs and warned on its fourth-quarter results.

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