China rate cut helps create global rally in stocks, oil

World stock markets and oil prices rallied on Friday after China rolled out a surprise interest rate cut.

The rally was also fueled by hopes of spurred global economic growth after the European Central Bank indicated it would step up asset purchases to boost the euro zone economy.

The jump in oil prices took beaten-down Brent crude back above $80 a barrel.

US interest rates eased as the dollar gained while the euro declined.

Wall Street's Dow Jones industrial average and the S&P 500 ended at new record highs, with each rising more than 1 per cent on the week in the fifth straight week of gains for US equities.

The Dow Jones .DJI rose 91.06 points, or 0.5 per cent, to close at 17,810.06 on Friday. The S&P 500 SPX gained 0.52 per cent to 2,063.50 and the Nasdaq Composite IXIC added 0.24 per cent to 4,712.97. The Nasdaq rose 0.5 per cent for the week.

European shares and growth-sensitive commodities all leapt on China's move to cut rates to 5.6 per cent, following recent data that showed its huge economy was heading for its worst year in almost a quarter of a century.

China's rate reductions were its first in more than two years. They came as ECB head Mario Draghi spoke of his determination to use more aggressive measures, such as large scale asset purchases, to ensure the euro zone does not slump into a new crisis.

Both the euro zone and China have lagged the momentum of the United States, stimulus-driven Japan and faster-growing Britain over the last month, but a ramping up of the ECB's rhetoric and Beijing's actions will stoke hopes of a turnaround.

Germany's DAX and France's CAC rose nearly 3 per cent. The FTSE Eurofirst 300 added 2.1 per cent.

The MSCI world equity index .MIWD00000PUS, which tracks shares in 45 nations, was up 0.76 per cent.

The dollar index was up 0.82 per cent, as the euro gave up more than 1 per cent and was last at $1.2385.

The yen was up against the dollar. Japan's finance minister Taro Aso said on Friday the yen's fall over the past week was "too rapid." It was one of the strongest warnings against a weak yen since the aggressive stimulus efforts began two years ago, and saw the currency leap off a 7-year low to 117.72.

The rate cut by China added to a positive mood among oil traders, many of whom expect the Organisation of the Petroleum Exporting Countries to trim production at what looks to be a landmark meeting in Vienna on Nov 27. Brent traded above $80 a barrel and was last up $1 to $80.35.