The euro climbed versus other majors on Thursday as traders considered the European Central Bank's decision to lower interest rates, but by less than expected.

The ECB reduced its key interest rate by a quarter percentage point to an all-time low of 1.25 percent. However, economists had expected the ECB to lower the rate by a half point.

In comments following the bank's decision to cut its benchmark interest rate by a quarter percentage point, ECB President Jean-Claude Trichet also signaled that there is still room to cut the benchmark interest rate for Eurozone and said the world economy is undergoing a severe downturn.

The euro rallied to a weekly high of 1.3490 versus the greenback. The single currency had hit a 13-day low of 1.3113 earlier in the week.

Labor Department data showed that initial jobless claims rose to 669,000 for the week ended March 28th, up from the previous week's revised figure of 657,000. Economists had expected jobless claims to edge down to 650,000 from the 652,000 originally reported for the previous week.

The European currency rallied to as high as 0.9172 against the British pound, moving off yesterday's 3 1/2 week low of 0.9083.

The Bank of England's latest Credit Conditions Survey said lenders reported slight increase in corporate credit availability in the last quarter, in contrast to a small drop expected in the fourth quarter. Lenders anticipate further increase over the coming three months.

The euro surged to a nine-day high of 134.23 against the Japanese yen. With the rally, the single currency tested a five-month high of 134.51.

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