ECB

ON BONDS

The European Central Bank has cut interest rates by 25 basis points to 1% and announced new measures to help ease funding pressures.

Global stock markets rallied hard yesterday on news of co-ordinated action by major central banks to improve liquidity, but analysts are divided over whether it will lift markets further in December.

The Dow Jones Industrial Average rose by almost 500 points overnight as US indices jumped following news of co-ordinated central bank action to ease liquidity concerns.

Eurozone leaders' failure to call for ECB intervention on the continent's debt crisis at a press conference yesterday caused the euro to fall to a seven week low against the dollar.

FIXED INCOME

The new president of the European Central Bank (ECB), Mario Draghi, has called on European leaders to aid bond markets by increasing the size of the eurozone bailout fund.

ON ASSET ALLOCATION

Since inception, the euro area has been an accident in waiting. Moreover, it was at a turning point in the cycle that the initial skid was always likely to occur.

Kames Capital's Bill Dinning said the ECB needs to urgently introduce quantitative easing to avoid a situation that would make the Lehman Brothers collapse look like "child's play".