European Stocks Bounce Back Ahead Of Rate Cut Decision

London, UK (AHN) - Shares of European markets gained on Thursday morning led by the region's financial companies, ahead of rate cut decision by the European Central Bank and the Bank of England as the euro-zone economy struggles to gain investor confidence.

The stock markets rallied after reports that the Europe's central bankers may cut key benchmark rates by half percentage point and a full percentage point to reduce the European Central Bank's level to 3.25 percent and the Bank of England's rate to 2 percent, respectively.

Traders are still concerned that the recession in the region is likely to push the financial companies to report more writedowns in the next few quarters and lower fiscal full-year earnings.

The pan-European Dow Jones Stoxx 600 increasing by 1.30 percent to 198.29 on Thursday at 11:55 p.m. GMT, reducing the year-to-date losses to 44.95 percent so far this year.

At 10:55 a.m., in late morning trade session, London's FTSE 100 index was trading higher by 61.53 points or 1.48 percent at 4,231.49 points. Frankfurt's DAX was increasing by 126.42 points or 2.77 percent at 4,693.66 points.

At the same time, the CAC 40 in Paris was trading higher by 65.26 points or 2.06 percent at 3,231.91 points.

In the financial services sector, shares of Credit Suisse Group AG rebounded to trade higher than 4 percent in Zurich trading, despite reports that it plans to cut as many as 5,300 jobs, or 11 percent of its total workforce, primarily in investment banking segment.

The reduction in headcounts will save 2 billion Swiss francs ($1.64 billion), representing 9 percent of the bank's reported nine-month annualized 2008 cost base, the company said in a statement.

Credit Suisse Group also reported on Thursday that it estimates a net loss of 3 billion Swiss francs ($2.46 billion) in the first two months of the fourth quarter.

Shares of Man Group, the world's biggest listed hedge fund by market value, were advancing by as much as 4.6 percent, followed by Societe Generale SA and Barclays Plc adding more than 4 percent.

In addition, Sweden's central bank announced that it has reduced its key lending rate by a record 1.75 percentage points, which is the largest cut since 1992 and a large reduction to dampen the fall in production and employment and to attain the inflation target of 2 percent.

The central bank said on Thursday that it cut the benchmark interest rate to 2 percent to curb the slowdown in the economy that is hit hard by the on-going financial turmoil. The Executive Board of the Riksbank has indicated that it will not raise borrowing costs until 2010.