LONDON, March 3 (Reuters) - European stocks extended gains and bond yields fell in a sharp risk-on trade after the U.S. Federal Reserve cut interest rates on Tuesday by a half percentage point in an emergency move.
The Fed said it was cutting rates to a target range of 1.00% to 1.25%, saying “the coronavirus poses evolving risks to economic activity”.
The pan-European STOXX 600 index jumped 3.2% to day highs after the news, while German bond yields briefly fell with 10-year yields last up 3 bps on the day at -0.59%.
Italian bond yields extended their falls, with 10-year yields last down 9 bps on the day at 1.06%.
Britain’s pound meanwhile rose further and was last up 0.6% on the day at $1.2825.
“We are seeing talk translating into action which is very welcome,” Peter Kinsella, head of FX strategy at UBP. (Reporting by London Markets Team, editing by Karin Strohecker)