Asia rebounds on rate cut, while Europe, US fall

European stocks and US index futures declined after European Central Bank President Jean-Claude Trichet said he's committed to fighting inflation, damping optimism that borrowing costs may drop anytime soon.

A surprise interest-rate cut by the Federal Reserve lifted shares in Asia to their biggest advance in five months. Stocks reversed earlier gains in Europe after Trichet's comments, led by BHP Billiton, Eni SpA and HBOS Plc.

The Bank of England said on Wednesday consumer prices may rise at a faster pace this year. Apple Inc. slid in Germany after its forecast missed analysts' estimates.

"We need to remember that just because the Fed cuts aggressively, the other central banks will not," said Jane Coffey, head of equities at Royal London Asset Management, where she helps oversee about $11 billion.

"The BOE and the ECB have a remit to control inflation. The Fed has a dual role to monitor inflation and growth and right now they are focused on growth."

The Dow Jones Stoxx 600 Index lost 3 per cent to 305.98 as of 12:53 p.m. in London, erasing yesterday's 2.2 gain that was triggered by the Fed cuts. Standard & Poor's 500 Index futures expiring in March lost 2.6 per cent to 1,275.6.

Commodity producers BHP and Eni followed declines in metals and oil prices, while HBOS declined after ABN Amro Holding NV recommended selling the stock. Cie. Financiere Richemont SA slid as the world's largest jewelry maker said sales growth slowed.

National benchmarks declined in all 18 markets in western Europe except Luxembourg. The UK's FTSE 100 slipped 2.6 per cent. France's CAC 40 lost 3.9 per cent. Germany's DAX Index fell 4.3 per cent.

The Stoxx 50 declined 3.5 per cent, and the Euro Stoxx 50, a measure for the euro region, dropped 4.2 per cent.

Asia rebounds on rate cut
Asian stocks rebounded from the biggest two-day drop in 18 years, led by banks and mining companies, after the US Federal Reserve lowered borrowing costs to ward off a recession.

"The Fed's move will obviously help the global economy and the problems we're seeing right now will work themselves out eventually," said Peter Chiang, who helps manage $16 billion as chief equity strategist at DBS Asset Management in Singapore. "There's still some concern on the impact of a US slowdown."

The MSCI Asia Pacific Index added 3.9 per cent to 137.17 as of 7:02 p.m. in Tokyo, its biggest gain since August 20.

The index dropped 10 per cent in the past two days, the steepest decline since April 1990. A measure of the benchmark's volatility jumped to 50 on Wednesday, the highest since May 2004.

Japan's Nikkei 225 Stock Average added 2 per cent to 12,829.06. Hong Kong's Hang Seng Index surged 11 per cent, the steepest gain since February 1998, and Asia's biggest advance.

Infosys Technologies paced gains in India, where the Sensitive index climbed for the first time in eight days. The rebound in most Asian markets on Wednesday helped trim the MSCI regional benchmark's 2008 loss to 13 per cent.

The Hong Kong Monetary Authority cut its base rate for overnight lending to 5 percent from 5.75 per cent. The city's monetary policy tracks the Fed's because its currency is pegged to the U.S. dollar.

Infosys, India's second-biggest computer-services provider, rose 3.3 percent to Rs 1,422.95, halting a 10-day, 17 per cent retreat.

JPMorgan Chase & Co. raised its rating on Infosys and rivals Wipro Ltd. and HCL Technologies to "overweight" from "neutral", citing the stocks' recent tumbles.

Taiwan's Taiex index was the region's only decliner on Wednesday, slipping 2.3 per cent. Cathay Financial Holding Co. led declines after the island's jobless rate unexpectedly rose in December to 3.95 per cent, a seven-month high, raising concern domestic consumption may falter.