European Stocks Surge After China Cuts Interest Rate

European stocks surged Friday afternoon local time following China's central bank cutting interest rates for the sixth time since last November. The news out of China further extended gains the European market had already taken on from the prospect this week of additional stimulus via the European Central Bank, Market Watch reported.

The Stoxx Europe 600, a stock index, shot up more than 2 percent on the day to around 378, eyeing its highest close since the beginning of the week. Prior to the afternoon boost sparked by China, investor sentiment had been buoyed by the European Central Bank's indication that it was willing to extend its bond-buying program. European Central Bank President Mario Draghi said the policy would need to be "re-examined" in December, indicating the quantitative easing program could continue past September 2016, CNBC reported.

The Chinese central bank said Friday it would lower its one-year lending rate from 4.6 percent to 4.35 percent and cut the one-year deposit rate from 1.75 percent to 1.5 percent. It also eased reserve requirements for banks. The rippling effects were felt in Europe, boosting confidence that China was committed to resolving its continued economic slowdown.

"The People’s Bank has delivered another jolt of stimulus," said Mark Williams, chief Asia economist at Capital Economics, in a note via Market Watch. "The key point is that we shouldn’t take today’s announcement as evidence that policy makers have grown more concerned about the economy. Instead, this is a controlled easing cycle that underlines how China’s policy makers, unlike many of their peers elsewhere, still have room for policy maneuver."

The People's Bank of China's last rate cut in August caused tumult in the international markets as it was combined with a 2 percent reduction in the value of the yuan, China's currency. But Friday brought early gains for U.S., Asian and European markets. Ahead of the markets closing, Germany's DAX was up 2.67 percent, France's CAC gained 2.28 percent, Spain's IBEX was up 1.25 percent and the United Kingdom's FTSE 100 index UKX was up 1.05 percent.

While some gained confidence from China's decision to cut interest rates, other analysts saw it as a sign that the country is concerned about a lack of growth.

“The Chinese decision indicates that the authorities are clearly worried about the slowdown in the pace of economic growth and have decide to engage in more pre-emptive action," said Sanjiv Shah, chief investment officer of Sun Global Investments, according to the Guardian.