Markets rally before ECB rate call

European stocks jumped Wednesday on hopes that the European Central Bank could deliver more stimulus measures to fight the region\'s debt crisis, dealers said. In morning deals, London\'s benchmark FTSE 100 index soared 1.41 percent to 5,335.51 points, as British investors returned after a long four-day holiday weekend to celebrate Queen Elizabeth II\'s diamond jubilee. In Paris, the CAC 40 gained 2.21 percent to 3,052.01 points and Frankfurt\'s DAX 30 leapt 2.05 percent to 6,091.43, despite news that credit rating agency Moody\'s has cut ratings on six major German banks. Madrid\'s IBEX 35 index surged 3.10 percent to 6,461.90 points, led by sharp gains in the banking sector. The European single currency meanwhile rose to $1.2509, compared with $1.2450 late in New York on Tuesday. Later this morning, at 1145 GMT, the ECB is to announce in Frankfurt the outcome of its latest monetary policy meeting. The central bank is widely predicted to refrain from cutting borrowing costs this month below their current historic low of 1.0 percent. Some analysts speculated that the ECB could decide to introduce more emergency fire-fighting measures aimed at preventing a spread of the eurozone crisis. \"European equity markets are trading moderately higher this morning ... ahead of today\'s eagerly awaited ECB meeting,\" said ETX Capital trader Markus Huber. \"While generally chances are considered as slim that the ECB will lower rates and/or resume their periphery bond purchasing program ... it cannot necessarily be excluded completely altogether.\" ECB policymakers would be mindful of the slowdown in eurozone inflation, alongside the recent deterioration in the eurozone\'s long-running sovereign debt crisis, he added. \"Traders are wary of holding short stock index positions ahead of today\'s ECB meeting just in case the central bank decides to intervene further,\" agreed analyst David Morrison at traders GFT Markets. The bank is under increasing pressure as the eurozone debt crisis, which has already resulted in EU/IMF rescue deals for Ireland, Greece and Portugal, threatens to sink Spain -- which many analysts argue is too big to bail out. The euro had struck $1.2288 last Friday, hitting the lowest level since July 1, 2010, as markets were rocked by speculation that debt-plagued Spain could be forced into a bailout. Spanish Prime Minister Mariano Rajoy has refused so far to seek financial assistance from the European Union that would come with strings attached, but has acknowledged that the situation with the banks is critical. Sentiment was boosted on Wednesday after Asian markets mostly rose, as European members of the Group of Seven (G7) industrialised economies promised a swift response to the eurozone crisis. Hong Kong rose 1.43 percent, Tokyo won 1.81 percent and Sydney also edged up 0.29 percent after data showed that the Australian economy grew better than expected in the January-March period. In an emergency teleconference Tuesday, the European members of the G7 vowed to respond \"speedily\" to the continent\'s crisis, according to Japanese Finance Minister Jun Azumi. \"We were able to share our recognition on the European issue,\" he was quoted as saying by Jiji Press after the G7 ministers and central bank chiefs talked. \"The European side stated that they will respond to it speedily.\" Some analysts expressed disappointment, however, saying the leaders appeared to lack a sense of urgency. Also providing some support was a report in the Wall Street Journal which said that the US Federal Reserve was again contemplating stimulus measures in the wake of weak data from Asia to Europe and the United States.