European shares closed steeply higher on Thursday after the European Central Bank (ECB) surprised markets by cutting interest rates to new record lows and announcing a bond-buying program.
The pan-European FTSEurofirst 300 index closed provisionally 1.1 percent higher at 1,401.07 points after the rate announcement and ECB President Mario Draghi's subsequent press conference. It marked the highest close since January 2008.
ECB makes triple rate cut
The ECB cut three major interest rates, with the rate for its main refinancing operations decreasing to 0.05 percent. It also cut the rates on its marginal lending and deposit facilities to 0.30 percent and -0.20 percent respectively.
Draghi also announced the ECB would purchase asset-backed securities (ABS) and covered bonds to boost growth and inflation.
"This is quite complex package of measures," he told assembled journalists. "The purpose is very different from previous programs... the aim is to increase the measures that produce credit easing… and also to significantly stir the size of our balance sheet towards the dimensions it used to have at the beginning of 2012."
Banking stocks were major gainers on the news, closing up around 2.2 percent. The euro fell to a 13-month low against the dollar and U.S. stocks were also boosted, with the Dow and at new session highs.
Meanwhile, the Bank of England left interest rates and its asset purchase target unchanged on Thursday, as expected, despite growing calls by some Bank members for a change in policy.
Putin looks for peace?
World leaders met in Wales for a NATO summit on Thursday, during which Secretary-General Anders Fogh Rasmussen accused Russia of "attacking" neighboring Ukraine.
However, signs continued on Thursday that Ukraine and Russia were nearing a case-fire in troubled eastern Ukraine. Ukrainian President Petro Poroshenko and the main pro-Russian rebel leader said they would order ceasefires on Friday, provided that an agreement was struck on a new peace plan.
Standard Life climbs
On the data front, new figures showed German factory orders jumped 4.6 percent in July and managed to beat market forecasts. Analysts called the numbers a "welcome upward surprise."
Meanwhile, France's unemployment rate edged up to 10.2 percent in the second quarter of 2014.
Industrial services and construction group Bilfinger announced a profit warning on Thursday morning; shares of the German company closed around 9.5 percent lower.
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