European shares hit one-week high as ECB cuts interest rates

European shares jumped on Thursday after the European Central Bank (ECB) cut interest rates again as inflation hovers within striking distance of its 2% target and the domestic economy is skirting a recession.

The pan-European STOXX 600 index was up 0.8% at 511.98 points, hitting one-week highs, with all regional bourses ending the session with healthy gains.

The ECB lowered its deposit rate by 25 basis points to 3.50% in a widely telegraphed move, following up on a similar cut in June, which left most of Europe's sectors in the black except utilities, which edged down 0.1%.

Investors' attention has now shifted to what comes next and how ECB decisions will be shaped by the US Federal Reserve's expected start to its own rate-cutting cycle next week.

"The risk of the economy overheating because of further rate cuts appears low, making economists'...