LONDON, June 5 (Reuters) - The euro fell to a four-month low and German Bund futures rallied on Thursday after the European Central Bank cut interest rates and said further policy measures would be announced later in the day.
The ECB’s initial announcement of a cut in its key interest rates, including slashing its deposit rate below zero for the first time, triggered volatile market trading before it said in a statement more action would be forthcoming.
The euro traded down a third of a percent against the dollar at $1.3666 after the announcement.
Bund futures rose to the day’s high of 146.39, up as much as 46 ticks on the day. Euribor interest rate futures <0#FEI:> rose 0.5-4 ticks from levels seen before the decision, pushing implied rates down.
The euro zone’s Euro STOXX 50 index extended gains after the announcement to trade 0.8 percent higher on the day, hitting its highest level since September 2008 at 3,266.21 points.
British government bond futures rallied to a session high, and 10-year gilt yields fell, narrowing their spread over Bunds by 2 basis points after the decision to just below 122 basis points, their lowest since June 2. (Reporting by London markets team, Writing by Emelia Sithole-Matarise; Editing by Nigel Stephenson)