LONDON -- European equity markets took a firmer footing this morning following an expected rate cut by the European Central Bank and a surprise interest-rate cut by the Peoples' Bank of China, or PBC.

In a move widely expected by the market, the ECB today cut its main policy rate by 25 basis points to 0.75%, a historical low, while at the same time reducing its deposit rate to zero. The deposit rate is that which the ECB pays banks for their overnight deposits, and this move shows strong attempts by the central bank to help boost economic growth and promote interbank lending.

At the same time, the PBC cut its interest rates for the second time in less than a month, reducing deposit rates by 25 basis points to 3% and its one-year lending rate by 31 basis points to 6%. Combined with the announcement by the Bank of England that it will increase its asset buyback program, these stimulus measures have been helping European stocks since their announcement. With this, the German DAX (INDEX: ^GDAXI) is seeing one of the best performances, up almost 0.9%.

Germany's Volkswagen (NASDAQOTH: VLKAY.PK) is seeing a lot of headlines this morning, up 6% after it agreed to buy the remaining 50.1% stake in Porsche's automotive business that it doesn't already own. The deal is worth around 3.9 billion euros and brings to an end the seven-year debacle between the two companies. The move comes two years sooner than expected; after VW announced last night that it was able to reach an agreement with the German tax authority.

Also on the corporate front, news today that the U.K.'s GNK is to buy Volvo's (NASDAQOTH: VOLVY.PK) aerospace unit -- which predominantly focuses on aircraft engines -- for 633 million pounds, has been leading both companies to outperform. The British firm said it has undertaken the deal to narrow the gap between it and rivals such as Safran, and it intends to raise 140 million pounds in a share sale to partly fund the deal. Volvo has been trading around 2.5% higher today.

In France, the national competition regulator announced that it has reached an agreement with banks to end a probe into interbank commissions on electronic withdrawals and automatic payments. Boosted further by the ECB's efforts to promote interbank lending in eurozone countries, the sector is outperforming in Paris, with Societe Generale (NASDAQOTH: SCGLY.PK) leading the way.

On the other side of the market, weakness in some of the more industrial commodities is having a negative impact on related sectors in the stock market, with steelmaker ArcelorMittal (NYSE: MT) leading losses after trade union officials reported yesterday that the company will be cutting administrative staff in an attempt to reduce costs by 25%. The officials said they will be raising the issue with ArcelorMittal management at a meeting in Luxembourg next week, and concerns are now rising that this will lead to labor troubles for the company. Arcelor's shares have been trading down more than 2.5%.

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