By Sue Chang, MarketWatch
SAN FRANCISCO (MarketWatch) — Brazilian and Mexican rallied on Thursday following a surprise interest rate cut by the European Central Bank in response to persistent financial instability in Europe.
Brazil’s Bovespa /zigman2/quotes/210597947/delayed BR:BVSP +2.78% rose 1.5% to close at 58,196.30, led by Gol Linhas Aereas Inteligentes /zigman2/quotes/205649353/delayed BR:GOLL4 +6.30% which jumped 8.5%
Draghi delivers surprise rate cut
The European Central Bank's new president, Mario Draghi, announces a surprise interest rate cut.
The European Central Bank slashed its key lending rate by 25 basis points to 1.25% in the first policy meeting chaired by new ECB President Mario Draghi, who took over the helm of the central bank on Tuesday. Read about ECB’s unexpected rate cut
The rate cut, although expected, had come earlier than most economists had anticipated.
The move lifted U.S. stocks with the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.27% gaining 1.8% to 12,044.47 and the S&P 500 Index /zigman2/quotes/210599714/realtime SPX +1.73% up 1.9% to 1,261.15. Read MarketWatch’s stock market report
Reports that Greece will abandon its plan to hold a referendum on the bailout package put together by Europe last week are also gave Latin American stocks a leg up as lingering concerns about Greece had pressured global stock markets. See pulse on Greek development
Mexico’s IPC /zigman2/quotes/210597945/delayed MX:IPC +0.81% climbed 2.3% to end at 36,579.07, aided by strong gains in Cemex /zigman2/quotes/208458110/delayed MX:CEMEXCPO +1.99% which soared 7.7% and TV Azteca /zigman2/quotes/207177078/delayed MX:AZTECACPO +10.67% which advanced 6.6%.
Chile’s IPSA /zigman2/quotes/211756426/delayed CL:SPIPSA +1.30% also rose 0.2% to 4,277.39 and Argentina’s Merval index rallied 3.5% to 2,782.87.