Sterling spikes lower after BoE announced to increase the size of the Asset Purchase Programme by 50b pounds to 125b pounds. MPC expects to take another three months to complete the programme. The decision to keep rate unchanged at 0.5% is widely expected by the ramp up of asset purchase was a surprise to the markets. In the accompanying statement, BoE noted that GDP in UK fell sharply in Q1 but data are showing sign of slowing decline. considerable economic stimulus from easing in monetary and fiscal policy, plus substantial depreciation in sterling, falls in commodity prices and international actions will improve credit availability and lead to recovery. But the timing and strength is highly uncertain. Focus will turn to inflation report on May 13 and meeting minutes on May 20.

ECB cut key interest rates by 25bps to 1.00% as widely expected. Interest rate on marginal lending facility is also cut by 50bps to 1.75% while interest rate on deposit facility was left unchanged at 0.25%. Focus will turn to Trichet's press conference.

On the data front, Switzerland's CPI rose +0.9% mom in April, better than consensus of +0.6% and -0.3% a month ago, as led by pickup in clothing and shoe prices. However, petroleum prices remained the negative driver. On annual basis, the reading contracted -0.3% following -0.4% decline in March, indicating persistence of deflationary risk. In Germany, factory orders surprisingly rose +3.3% mom in March, the first monthly gain in 7 months, following a -3.1% drop in February. Annual decline was also stabilized at -2.67% , better than market expectation of -35.8% and upwardly revised -3.8% in the previous month, signaling the sharp plunge in orders has been over.

In Australia, unemployment rate unexpectedly dropped to 5.4% in April (consensus: 5.9%, March: 5.7%). 27.3K jobs were added during the month following a 37.2K contraction in March. New Zealand's unemployment rate rose to the 5th consecutive month to a 6-year high at 5% in 1Q09, compared with consensus of 5.3% and 4.7% in the previous quarter while the number of jobs reduced -1.1% during 1Q09 after gaining +0.9% a quarter ago. Japanese Nikkei closed at 9385, up 408 pts or 4.55%.