FTSE gains ground following rate cuts

Indices across Europe were on the up today, as investors digested yesterday''s big bank rate cuts.

The FTSE 100 closed 1.79 per cent up at 4348.81, while Frankfurt''s DAX gained 2.26 per cent.

Yesterday, the European Central Bank reduced its rate from 3.75 to 3.25 per cent – while the Bank of England cut 150 basis points from its rate.

Meanwhile, in America the Dow Jones was up one per cent by 16:29 GMT.

Analysts advised caution on sustained rallies, however – with investor concerns over the continuing credit crunch still high.

The International Monetary Fund released figures yesterday, suggesting that US GDP would shrink by 0.8 per cent in 2009.

Philip Lawlor, chief portfolio strategist at Nomura, told Reuters: "The current rate cut is not what is going to engineer a rebound in the economy," he commented.

"This is just what has to be done to stop a prolonged recession…recovery is a 2010 story."