Asian, European Stocks Rise on Rate Cut

A woman walks past a digital stock indicator in downtown Tokyo Wednesday, Sept. 19, 2007. Japanese stocks jumped Wednesday in the wake of Wall Street's overnight surge spurred by the U.S. Federal Reserve's bigger-than-expected interest rate cut. The benchmark Nikkei 225 stock index soared 500.22 points, or 3.17 percent, to 16,302.02 points on the Tokyo Stock Exchange in early afternoon trade after the Federal Reserve cut its benchmark interest rate by a larger-than-expected half percentage point overnight. (AP Photo/Koji Sasahara) (Koji Sasahara - AP)

LONDON -- European and Asian stock markets rallied Wednesday in the wake of Wall Street's surge spurred by the U.S. Federal Reserve's larger-than-expected interest rate cut.

Key market indicators rose 3 percent in France and more than 2 percent in Britain and Germany after even bigger gains in Japan and Hong Kong.

Investors cheered the Fed's decision on Tuesday to cut its benchmark interest rate by a half percentage point to 4.75 percent, a move aimed at keeping problems in the mortgage market from causing a recession in the U.S. economy _ a key export market for many Asian and European companies.

"They did the right thing," Joseph Han, a strategist at Daewoo Securities Co. in Seoul, said of the Fed's aggressive cut. Many analysts expected a quarter-point reduction in the fed funds rate.

After Tuesday's rate cut, the Dow Jones industrial average posted its biggest one-day point gain in nearly five years _ a surge of 335.97 points. In afternoon trading Wednesday, the index gained another 81.37 points to 13,820.76.

Britain's benchmark FTSE 100 rose 2.8 percent to 6,460.00. Germany's DAX gained 2.3 percent to 7,750.84 and France's CAC-40 climbed 3.3 percent to 5,730.82.

Earlier in Asia, Japan's benchmark Nikkei 225 stock index soared 579.74 points, or 3.7 percent, to close at 16,381.54 points, marking its biggest point gain in more than five years. Hong Kong's Hang Seng index jumped 977.79 points, or 3.98 percent, to 25,554.64.

Shares in India hit an all-time high, as the Bombay Stock Exchange's 30-share Sensex surged 654 points, or 4.2 percent, to 16,323.

Stock markets in South Korea, Australia and Singapore also advanced, although Chinese shares faltered.

Kaoru Yosano, Japan's chief government spokesman, welcomed the Fed's decision.

"They have reacted very quickly to the realities," he told reporters.

On Wednesday, the Bank of Japan decided to leave its key interest rate unchanged at 0.5 percent, as widely expected.