European stock markets extended gains after the European Central Bank's surprise move to cut interest rates to 1.25% from 1.5% while the euro bounced around against the dollar and the pound as traders awaited a press conference for the ECB to explain the cut.
The move at new ECB president Mario Draghi's first governing council meeting was widely unexpected in markets and prompted German government bond prices briefly to erase some of their losses.
Draghi holds a news conference at 1.30pm UK time.
The FTSE 100 is up 72 points, or 1.3%, at 5556.3, Germany's DAX is now up 132 points, or 2.2%, at 6097 and France's CAC40 is up 70 points, or 2.3%, at 3180.8.
In a Reuters poll of 70 economists last week, only 11 said the ECB would cut at this meeting. Most had expected the eurozone's central bank to wait till December.
Carsten Brzeski at ING Financial Markets coined Draghi "Super Mario":
Super Mario jumps ahead of the curve
What a starter. The ECB just cut interest rates to 1.25%. It is obvious that the ECB has caught the crisis virus and is trying everything it can to prevent a full-fledged recession. Now, the big question for the press conference is whether the ECB is also willing to do everything to prevent a further escalation of the sovereign debt crisis, becoming the unconditional lender of last resort of the eurozone. Stay tuned for an exciting press conference with new president Mario Draghi.
