The US Federal Reserve has cut its key lending rate by half a point to 1% in the latest move to ease the credit crisis that is strangling the country's economy.
The cut in the federal funds rate followed an emergency half-point cut earlier this month co-ordinated with other central banks to help ease the worldwide credit crunch.
Wall Street was mixed in highly volatile trade after the move. The Dow Jones was down 0.1% at 9,056 points by 6.55pm. The Nasdaq added 0.9% to 1,664.
European stock markets soared, with some exchanges showing gains of more than 9% as investors counted on a round of global interest rate cuts.
London's FTSE 100 rose 8.05% to 4,243 points, while in Paris the CAC gained 9.2% to 3,403. By contrast, the Frankfurt DAX fell 0.3% to 4,809, dragged down by Volkswagen.
VW shares surged yesterday and on Monday on news that Porsche had boosted its stake in Europe's largest auto manufacturer. Shares in Madrid and Milan ended the day with gains of 9.4% and 9.9% respectively.
The Dublin market index also rallied strongly today, banking good gains from the financial stocks. The ISEQ flew 6.3% higher to close at 2,679 - a gain of 159 points.
Earlier, Tokyo shares rocketed 7.74% as the expected US rate reduction and hopes of a similar move in Japan lifted Asian markets.
