LONDON (Reuters) - The European Central Bank cut interest rates for the third time this year on Thursday, pointing out that inflation in the euro zone is now increasingly under control and the economic outlook has worsened.
The euro initially rose following the rate decision, but fell back following stronger-than-expected U.S. data. It was last trading 0.25% lower on the day at $1.0836, compared with $1.0863 just before the ECB announcement .
Europe's broad STOXX 600 index was last up 0.8% , while Germany's 10-year government bond yield, the benchmark for the bloc, was last up 3 basis points at 2.21%, versus 2.197% previously. Yields move inversely to prices.
COMMENTS:
ROBERT FARAGO, HEAD OF STRATEGIC ASSET ALLOCATION AT HARGREAVES LANDSDOWN, UK:
"Growth is so slow in Europe and inflation is back at target, it would be a surprise if they (the ECB) didn't continue to cut."
"I think in practice for European stocks, what matters more is what's happening in the U.S., because in the U.S., the rate decision is more difficult, given that the economy remains very strong and core inflation remains potentially pretty sticky."
"The U.S. is where we look for a surprise. I think the case for European rate cuts is pretty clear cut."
"During the (ECB chief Christine Lagarde's) speech, we'll be focused on the stickiness of wage inflation, core inflation, service inflation."
DEAN TURNER, CHIEF EUROZONE ECONOMIST, UBS GLOBAL WEALTH MANAGEMENT, LONDON:
"In our view, this is unlikely to be the last cut from the ECB this year. Another cut is likely in December, and we expect this will be followed by a series of cuts at every meeting through to June next year, with the deposit rate hitting 2% before the ECB reaches for the pause button."
"In the equity market, small and mid-caps in the euro zone offer attractive value and should be one of the main beneficiaries of ECB rate cuts, in our view."
"We expect the lower rates environment, together with the ongoing resilience in the U.S. economy to support cyclical currencies like the euro, which we expect to perform well against the U.S. dollar in the coming months."
ROBERTO MIALICH, FOREX STRATEGIST, UNICREDIT, MILAN:
"The message is exactly what we had in mind. ECB cut rates and made it clear that they are still dependent on data."
SEEMA SHAH, CHIEF GLOBAL STRATEGIST, PRINCIPAL ASSET MANAGEMENT, LONDON: