European stocks, euro drop after ECB rate cut

European stock markets posted mixed results on Thursday and the euro plummeted after the European Central Bank cut its main interest rate to a record low but did not announce new stimulus measures. The ECB cut its main refinancing rate to 0.75 percent in a widely anticipated move. In London, the Bank of England maintained its main rate at a record low of 0.50 percent and announced £50 billion ($78 billion, 62 billion euros) in additional stimulus to boost Britain\'s recession-hit economy. That brought the total amount of stimulus provided by the BoE so far to £375 billion. London\'s benchmark FTSE 100 ended a day of choppy trading with a slight gain of 0.14 percent at 5,692.63 points. Frankfurt\'s DAX 30 index turned lower meanwhile to post a loss of 0.45 percent at 6,535.56 points and in Paris the CAC 40 was down by 1.17 percent at 3,229.36. Madrid\'s Ibex 35 index plummeted by 2.99 percent to 6,954.20 points and in Milan the FTSE Mib fell by 2.03 percent to 14,089 points. The European single currency plunged to $1.2382 from $1.2527 late Thursday in New York. In midday stock trading in New York, the Dow Jones Industrial Average fell 0.19 percent to 12,918.88 points. The broader S&P 500-stock index lost 0.31 percent to 1,369.78, while the tech-rich Nasdaq was 0.11 percent higher at 2,979.34. In China, a second interest rate cut in less than a month surprised markets and analysts suggested that the world\'s second-biggest economy might be slowing more quickly than expected. With the anticipated ECB rate cut and BoE stimulus boost already priced in, markets had expected more from Frankfurt and London and were left wanting. \"Investors had built their hopes up too high ahead of today\'s central bank meetings and there are growing concerns that the apparent consensus reached at last week\'s EU summit is not as game-changing as first thought,\" noted GFT analyst David Morrison. Eurozone leaders agreed last week to allow emergency rescue funds to recapitalise commercial banks directly, taking pressure off the national accounts in their host countries. With the exception of also establishing a eurozone banking supervisory body and putting official creditors on a par with private investors, other measures were relatively minor or remained a question of interpretation. They notably included the conditions under which the funds could buy sovereign bonds to help out heavily-indebted countries like Greece and Italy. Investors had therefore looked to the ECB for some additional support. But ECB president Mario Draghi told a press conference after the rate cut was announced that he and eurozone central bank governors \"didn\'t discuss any other non-standard measures.\" He referred to previous massive cash injections into the banking system and a dormant ECB programme of buying sovereign bonds issued by heavily indebted countries. The interest rate, or yield on Italian 10-year bonds promptly jumped back above 6.0 percent, a level which is considered unsustainable over the long term. Spanish 10-year bonds traded at 6.773 percent and Spain\'s risk premium, which measures the extra yield demanded in comparison with safe-haven German 10-year bonds, remained high at 5.03 percentage points. And in Greece, the new Finance Minister Yannis Stournaras warned that the country\'s recovery plan was \"off-track\" and said Greece faced \"difficult years ahead\" as sensitive talks with EU-IMF creditors began. The European Union and International Monetary Fund have bailed Greece out twice with plans worth a total of 240 billion euros, plus a debt restructuring worth more than 100 billion. A bright note was provided by Ireland, which successfully borrowed money on capital markets on Thursday, a vital step in its fight to recover from a debt rescue and be the first eurozone failure to get back on its own feet. The amount raised of 500 million euros ($625 million) was small and the duration of the loans short at three months, but it was the first time for two years that Ireland had been able to borrow on the open market. In company news on Thursday, shares in Barclays Bank gained 1.33 percent to 168.2 pence even though Standard and Poor\'s cut the bank\'s long-term rating outlook and Moody\'s slashed its financial strength rating outlook after top executives resigned over an interest rate rigging scandal. Europe\'s biggest automaker Volkswagen jumped 5.08 percent to 134.50 euros as it prepared to wrap up its takeover of German luxury sports car group Porsche two years earlier than planned in order to unlock hitherto untapped economies of scale. Berenberg Bank chief economist Holger Schmieding summed up investor sentiment by asking: \"Are we heading for a stormy summer?\" \"If the situation were to get much worse, the ECB would do more than it has done today,\" he concluded.