Friday, 3 May 2013

ECB cuts rates, S&P 500 rises to record high

As expected, the European Central Bank cut its main interest rate by 25 basis points to a record low of 0.50 percent at its monetary policy meeting on Thursday.

The ECB decision came amid further signs on Thursday of continuing economic deterioration in the eurozone economy. Markit's eurozone manufacturing PMI fell to 46.7 in April from 46.8 in March.

In the US, the trade deficit narrowed in March. Imports decreased 2.8 percent, the most since February 2009, but exports also fell by 0.9 percent.

Investors mostly shrugged off the weak data, with the S&P 500 Index in particular rising 0.9 percent on Thursday to a record high. European stocks also rose on Thursday, the Stoxx Europe 600 Index adding 0.3 percent.

However, the euro fell for the first time in five days against the US dollar after ECB President Mario Draghi said after its monetary policy meeting that it may take the unprecedented step of charging banks to hold excess reserves.

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