The US Federal Reserve has cut one of its interest rates in a surprise move aimed at keeping credit flowing and calming nervous stock markets.
The Fed lowered its primary discount rate, which governs direct Fed loans to banks, by a half-percentage point to 5.75%.
The move had no effect on the federal funds rate - the US central bank's main monetary tool. The Fed statement said risks to economic growth had increased 'appreciably'.
The bank also said it was monitoring conditions and was 'prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets'.
It said financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty could restrain economic growth.
The move had an immediate effect on European stock markets, which gained as much as 3.5% after the news, having earlier extended Thursday's heavy losses.
Wall Street was up around 1.5% in trading this evening.
