European stocks steady on hopes of ECB rate cut

Europe's stock markets steadied on Thursday following sharp falls the previous day, after a European Central Bank council member hinted at a possible eurozone interest rate cut, dealers said.

Sentiment won a further boost after Germany's parliament approved an international bailout package for stricken eurozone member Cyprus by a large majority.

In afternoon trade, London's benchmark FTSE 100 index of top companies rose 0.09 percent to 6,250.00 points.

Elsewhere, Frankfurt's DAX 30 index edged down 0.3 percent to 7,591.72 points, and in Paris the CAC 40 slipped 0.21 percent to 3,591.72 points.

In foreign exchange activity, the European single currency firmed to $1.3065, from $1.3028 late in New York on Wednesday.

Gold rose to $1,397 an ounce on the London Bullion Market from $1,392. It had Tuesday struck a two-year low at $1,321.95 on weaker-than-expected Chinese economic growth data.

"It's much nicer landscape today than the last four days, with the markets up in Europe steadying after comments from ECB that raised hopes of interest rate cut," said Gekko Markets analyst Anita Paluch on Thursday.

European equities had fallen sharply on Wednesday, after Bundesbank chief and ECB council member Jens Weidmann declared that the eurozone's sovereign debt crisis could take a decade to overcome.

However, markets recovered on Thursday as investors concentrated on more supportive comments from Weidmann.

The ECB could cut interest rates if new information warranted such a move, but might not actually prove very effective, he said.

"We might adjust in response to new information (but) I don't think that the monetary policy stance is the key issue," Weidmann -- president of Germany's central bank the Bundesbank -- told the Wall Street Journal in an interview.

The ECB slashed its key interest rate to a historic low of 0.75 percent last July and has held it there ever since.

"Sliding equity markets and a weaker euro were the main themes from yesterday after surprise comments from ECB council member and Bundesbank head Jens Weidmann that any recovery from the current crisis in Europe could take up to a decade," said CMC Markets analyst Michael Hewson.

"He then followed that statement up with a surprise admission that the ECB could lower rates if new information warranted a cut.

"The market reaction was more pronounced than usual due to the fact that while other ECB board members have gone on record as suggesting rates might need to be lower, at no time has Mr Weidmann ever suggested he might also lean in that direction."

Markets were also hit Wednesday by swirling speculation over a possible credit rating downgrade for Germany.

However on Thursday, international ratings agency Moody's issued a credit update maintaining Germany's top "Aaa" rating, albeit with a continued negative outlook.

The agency emphasised, however, that its annual credit report on Germany "is an annual update to the markets and does not constitute a rating action".

In company news in London, GlaxoSmithKline shares rallied 3.48 percent to 1,663 pence after the drugs maker received a US recommendation for approval of its Breo Ellipta inhaler treatment for chronic obstructive pulmonary disease (COPD).

In Paris, meanwhile, French supermarket giant Carrefour saw its share price slide 0.39 percent to 20.55 euros after announcing a 7.5 percent drop in 2013 first-quarter sales compared with the same period a year earlier.

US stocks opened mixed, with the Dow Jones Industrial Average dipping 0.12 percent to 14,600.69 points after five minutes of trade.

The broad-based S&P 500 edged up 0.01 percent to 1,552.17, while the tech-rich Nasdaq Composite Index rose 0.04 percent to 3,205.99.

The mixed results came on the heels of Wednesday's sharp losses that followed weak earnings reports and dreary economic sentiment in Europe.

Markets are troubled by the "pummeling" that copper and other commodities have taken in recent days, said analyst Patrick O'Hare.

The drop in base metals "has raised a number of flags as it pertains to the growth outlook," O'Hare said. "Also, burgeoning concerns about the goings-on in China and renewed concerns about the state of the eurozone are acting as headwinds."

Asian markets mostly fell Thursday after losses on Wall Street overnight, with Tokyo skidding down 1.22 percent, Seoul shedding 1.24 percent and Sydney losing 1.60 percent.

Hong Kong slid 0.26 percent while Shanghai bucked the trend with a 0.17 percent gain.