The European markets rose for the third day on Thursday after G20 members pledged to do whatever necessary to end the global economic crisis.
The G-20 leaders, meeting in London, called for stricter limits on hedge funds, executive pay, credit-rating companies and risk-taking by banks and pledged more than $1 trillion in emergency aid to fight the worst economic crisis in decades.
The European Central Bank today lowered its key interest rate by 25 basis points to a new low of 1.25%, defying expectations for a larger reduction of 50 basis points. In comments following the bank's rate-cut decision, 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 U.S. Commerce Department said in its report that factory orders rose 1.8 percent in February following a revised 3.5% decrease in January. Economists had been expecting orders to rise by 1.5% compared to the 1.9% decrease originally reported for the previous month. The rebound in February marked the first increase in factory orders in seven months.
A report from the U.S. Labor Department showed that initial jobless claims rose to 669,000 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.
Crude for May delivery rose $3.72 to $52.11 a barrel on the New York Mercantile Exchange, as investors shrugged off a jump in U.S. unemployment and focused instead on a weaker dollar and rallying stock markets.
The FTSEurofirst 300 index of pan-European blue chips closed 4.88% higher at 781.48 points, while the narrower DJ Stoxx 50 index rose 5.02% to 1,928.29 points.
Around Europe, the U.K.'s FTSE 100 index rose 4.28% to 4,124.97, while France's CAC 40 index surged up 5.37% to 2,992.06 and Germany's DAX index climbed 6.07% to 4,381.92.
Mining stocks rallied after copper prices rose. BHP Billiton, the world's biggest miner, surged up 10.4%, while Anglo American, the second biggest, climbed 12.1% and Rio Tinto, the third biggest, rose 8%. Copper miner Antofagasta gained 6.4%.
Similarly, heavily weighted oil stocks gained after crude oil prices advanced. BP, Europe's biggest oil company, rose 2.5%, while Royal/Dutch Shell, the second biggest, surged up 3.9% and Total, the third biggest, climbed 5.3%.
Shares of automaker rallied after U.S. auto sales fell less than analysts had forecast in March, rebounding from a 27-year low in February. BMW, the world's biggest maker of luxury cars, surged up 14.8%, while Daimler, the second biggest, jumped 15.6% and Volkswagen, Europe's biggest carmaker, climbed 4%.
Deutsche Bank led banking stocks higher, rising 14.6%, after the company's executive said in a Financial Times interview it had solid results in March and does not need any additional capital.
HSBC, Europe's largest bank, climbed 11.8%, while BNP Paribas, France's biggest lender, surged up 10.7% and Banco Santander, Spain's largest bank, rose 9.5%.
K+S rallied 11% after the company agreed to buy Morton Salt from Dow Chemical Co. for $1.68 billion to become the world's biggest salt producer.
Electrolux, the world's second biggest home appliances maker, jumped 13% after Citigroup upgraded the stock to buy from hold.
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