European stocks closed higher yesterday, boosted by the first Chinese rate cut in three years, positive US jobs data and signs European leaders were edging towards the tough steps needed to tame the eurozone debt crisis. News that China was cutting interest rates for the first time in more than three years to bolster a slowing economy buoyed sentiment, with investors looking to the world’s second largest to help drive growth. Mark Williams, chief Asia economist at Capital Economics, said the cut was a strong signal that Beijing policymakers were focused on growth. “The move underlines two points. First, that policymakers are going all out to shore up the economy. Second, that China increasingly resembles a normal economy,” he said. In London, the benchmark FTSE 100 index of leading companies closed up 1.18% at 5,447.79 points. In Frankfurt, the Dax 30 gained 0.82% to 6,144.22 points while in Paris the CAC 40 added 0.42% to 3,071.16 points. Milan rose 0.88%. Madrid, centre of concern that Spain could be the next victim of the eurozone debt crisis, gained 0.3%, off its early highs after a better-than-expected government bond auction eased some nerves. In New York, stocks opened sharply higher but then slipped back after US Federal Reserve Chairman Ben Bernanke dented market hopes for more stimulus measures while highlighting the dangers posed by the eurozone crisis. The Dow Jones Industrial Average was up 0.53% at around 1540 GMT while the tech-heavy Nasdaq Composite was flat. “None of the chairman’s comments suggested that the Fed has a new outlook or plans for policy adjustment,” Briefing.com analysts commented. The European single currency was easier at $1.2563, compared with $1.2580 in New York late Wednesday. Remarks by German Chancellor Angela Merkel that greater European integration, both economic and political, was the answer to the debt crisis provide support after months of anguish over the way forward. “We need more Europe ... a budget union... and we need a political union first and foremost,” Merkel told German public television. “We must, step by step, cede responsibilities to Europe.” Meanwhile, new claims for US unemployment benefits fell last week after rising for four straight weeks, offering some hope of improvement after a series of disappointing figures as job creation tailed off. After a European Central Bank hint at an upcoming rate cut on Wednesday gave the markets a boost, the Chinese decision yesterday was the real deal. The move “has been long awaited and has satisfied the growing expectations of a rate cut by a major economy,” said Jordan Lambert of Spreadex in London. “This could give a much needed boost to trade in Europe and the rest of Asia as China’s domestic demand increases and as Chinese companies can now finance global operations at cheaper costs,” Lambert said. “It is also worth being mindful that sometimes such interest rate moves are coordinated with other central banks therefore there could be further surprises to the upside,” he added. Recent poor economic data has sparked fears over the health of the global economy and prompted speculation that the world’s leading central banks would implement emergency stimulus plans to boost activity.from gulf times.