Surprise US interest rate cut sees FTSE shares soar

Published on Wednesday 19 September 2007 11:55

LEADING shares in London soared today after bourses around the world reacted positively to the bigger-than-expected cut in US interest rates last night.

The FTSE 100 index of leading shares rose 154 points - 2.5 per cent - to 6438 on opening trades as a more optimistic mood seeped into equity markets that have been plagued by volatility amid the ongoing worries about the full effect on world economies of the sub-prime mortgage crisis in the US.

The Federal Reserve chopped 0.5 per cent off US borrowing costs, pushing them down to 4.75 per cent. Most forecasts had expected no more than a 0.25 per cent cut.

The move paves the way for other central banks, including the Bank of England, to implement cuts as the clamour grows to sooth fevered markets.

On Wall Street, the Dow Jones index leapt 336 points to 13739, while overnight in the Far East stocks powered higher.

One analyst said: "The market is now watching to see if Wall Street rallies again, or if yesterday was a one-off."