European stocks surge after ECB rate cut; DAX jumps 2.53%

Investing.com - European stock markets turned sharply higher on Thursday, after the European Central Bank unexpectedly cut its interest rate, while a potential collapse of the Greek government eased concerns over the country's upcoming referendum.

During European afternoon trade, the EURO STOXX 50 soared 2.56%, France’s CAC 40 jumped 2.49%, while Germany’s DAX 30 climbed 2.53%.

The ECB lowered its interest rate to 1.25% from 1.50%, signaling new efforts to tackle the region's debt crisis as Mario Draghi held his first policy-setting meeting as chairman of the central bank.

Meanwhile, Greek Prime Minister George Papandreou’s government was on the brink of collapse after several ministers said they did not support his plan for a referendum on the bailout agreement for Greece. Investors eyed a government confidence vote scheduled on Friday.

The financial sector posted strong gains, led by Dutch ING Group skyrocketing 10.70%, while France's BNP Paribas, which cut its exposure to Greece, Italy and Spain by more than EUR12 billion, saw shares soar 6.93%.

German lenders contributed to gains with shares in Deutsche Bank and Allianz climbing 4.05% and 4.59%, while Italian banks Intesa Sanpaolo and Unicredit jumped 5.95% and 5.40% respectively as Italian and Spanish borrowing costs soared after euro zone leaders raised the prospect of a Greek exit from the monetary union. 

The energy sector also surged with shares in German natural gas company RWE soaring 5.09% and E.ON jumping 3.91%, while French firms EDF and Total saw shares climb 2.14% and 1.81%.

In London, FTSE 100 advanced 1.11%, as U.K. lenders tracked their European counterparts.

Barclays was one of the day's top gainers with shares surging 5.28%, while Lloyds Banking climbed 3.48% and the Royal Bank of Scotland jumped 1.73%.

Elsewhere, mining giants Rio Tinto and Bhp Billiton erased earlier losses as shares advanced 1.03% and 1.28% respectively, while British Petroleum eased up 0.81%.

Copper producers also added to gains as Xstrata and Kazakhmys jumped 1.71% and 2.54% respectively.

Elsewhere, U.S. equity markets pointed to a higher open. The Dow Jones Industrial Average futures pointed to a rise of 1.06%, S&P 500 futures signaled a 1.01% increase, while the Nasdaq 100 futures indicated a 0.76% gain.

Later in the day, the U.S. was to produce a report on service sector activity from the Institute of Supply Management.