By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- European stocks climbed, but the euro
sank to a more than one-year low Thursday after the European
Central Bank cut interest rates and unveiled a bond-buying plan as
it battles low inflation in the eurozone.
ECB decision: Policy makers at the central bank cut three key
interest rates by 0.1% percentage point each. The refinancing rate
was lowered to 0.05%, the marginal lending rate to 0.3% and the
rate on the deposit facility to negative 0.2%. ECB President Mario
Draghi at his press conference then announced plans to begin
purchasing a broad portfolio of euro-denominated covered bonds as
well as asset-backed securities. Follow MarketWatch's live blog of
Draghi's press conference.
The ECB also cut its 2014 inflation forecast to 0.6% from a
previous estimate of 0.7%.
Market reaction: The euro (EURUSD) dropped fell more than a
penny against the U.S. dollar, trading below $1.31 for the first
time since July 2013, according to FactSet data. The shared
currency bought $1.3002 compared with $1.3132 on Wednesday.
"Draghi caught the markets sleeping today," with the rate cuts
and "the euro was beaten down against all major peers," said Farhan
Ahmad, a trader at TradeNext, in a note.
The Stoxx Europe 600 rose 0.8% to 347.55, touching intraday
highs after the ECB announcements. The benchmark had turned higher
before the ECB announcement following a Reuters report that the
central bank was considering a plan to buy asset-backed securities
worth up to 500 billion euros ($637 billion).
Among movers on the Stoxx Europe 600, Standard Life headed
advancers, surging 6.1% on the insurer's plan to return 1.75
billion pounds ($2.88 billion) to investors as the company agreed
to sell its Canadian assets to Manulife Financial .
Bilfinger SE shares were the index's worst performer, sliding
9.8% after the German construction and services company issued a
warning on profit for the third time in three months.
Among national markets, Germany's DAX 30 index turned higher by
0.3% to 9,651.66, and France's CAC 40 rose 1.3% to 4,478. The
U.K.'s FTSE 100 picked up 0.1% to 6,883. The Bank of England on
Thursday held its key interest rate at 0.5%, as expected.
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