Thursday, the European Central Bank lowered its key interest rates, but the reduction was less than expected despite indications that the 16-nation bloc is sliding deeper into recession. Meanwhile, the head of the central bank hinted that policy-makers could announce further non-standard policy measures in the next rate-setting session in May.

In the United Kingdom, a central bank survey showed that lenders intend to increase the credit availability to corporate and households in the coming three months. House prices increased unexpectedly in March from the previous month, ending a long streak of uninterrupted decline that started in October 2007.

In other news, the G-20 Summit officially kicked off in London at the Excel Center Thursday morning. World leaders would pledge to regulate major hedge funds and establish a new oversight board to monitor the global financial system, reports said citing a draft of the G-20 communiqué. The leaders would vow to cooperate over economic policies to restore global growth and refrain from competitive devaluation of their currencies.

Eurozone

In its meeting held in Frankfurt, Germany, the Governing Council of the ECB reduced the bank's key interest rate, which is the interest rate on the main refinancing operations, by a quarter percentage point. The reduction took the benchmark rate to an all-time low of 1.25%. 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.

Responding to reporters' questions, Trichet said he would announce full details of any further non-standard measures next month. He also hinted at possible rate cuts, saying he is not ruling out a measured approach to taking the key interest rate down further. He was clearer on the deposit rate, saying he did not expect any move from the present level of 0.25%.

French statistical office INSEE said the producer price index fell 4.5% year-on-year in February, sharper than a 2.7% decline recorded in January and a 3.4% drop economists forecast.

Spanish jobless claims increased 3.5% month-on-month in March as deepening slowdown forced firms to reduce headcounts, the Labor Ministry said. The official report showed that 123,543 people filed jobless claims in March taking the total number of unemployed to 3.6 million.

Italy's new car registrations totaled 214,218 in March, representing an increase of 0.24% from the same month in the previous year, a report by the country's Infrastructure Ministry showed.

The Statistical Service of the Republic of Cyprus said the consumer price index rose 1.1% year-over-year in March, faster than the 0.7% increase in the previous month.

Rest of Europe

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 Nationwide Building Society said house prices increased 0.9% on a monthly basis in March, reversing a 1.9% fall in February. Economists were looking for another 1.5% decrease in March.

In other news, Swiss National Bank's Vice President Philipp Hildebrand said the central bank will continue to take all measures to prevent further strengthening of the Swiss franc and reduce deflationary pressures.

Hungary's Central Statistical Office said in a final report that the trade deficit stood at EUR194 million in January, revised from EUR192 million deficit estimated initially. In December, the trade deficit was EUR79.4 million.

Statistics Iceland said the trade surplus stood at ISK8.3 billion in March, up from ISK5.9 billion surplus recorded in February.

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