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Fed Cut Feeds World Stocks

Shares rally everywhere as interest rates fall.
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World stocks surged Wednesday, a day after the Federal Reserve stoked a sharp rally on Wall Street with an unexpectedly steep 50-basis-point cut in its fed funds overnight lending interest rate target.

Shares rose 3.7% in Tokyo and 4% in Hong Kong after the Fed move, which is intended to ensure the economy doesn't succumb to a credit crunch that swept across markets this summer. European stocks showed strong gains as well, with major indices rising 2.3% in the U.K., 2.6% in France and 1.9% in Germany.

The gains come as investors await the latest update on the big U.S. brokerage firms' third-quarter earnings.

Morgan Stanley

(MS) - Get Morgan Stanley Report

is on deck Wednesday morning, a day after

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posted stronger-than-expected earnings while failing to completely dispel questions about its exposure to problems in the mortgage unit.

Also Wednesday, Lucky Charms maker

General Mills

(GIS) - Get General Mills Inc. Report

beat fiscal first-quarter earnings expectations by a nickel a share.