(Updated from 8:41 a.m. EDT)

In an unexpected move, the

European Central Bank

today cut its key interest rates by 25 basis points, its first cut since the global economic downturn started.

The move follows months of criticism during which the ECB was challenged for not easing monetary policy to help stem signs of sluggishness in the eurozone. The cut makes the ECB the last of the world's major central banks to cut rates in the face of a cooling global economy. The eurozone rate is now 4.5%.

Today's move sent stocks in Europe soaring and also gave a boost to futures trading in the U.S. before the market opened.

Jason Bonanca, a currency strategist at

Credit Suisse First Boston

, said today's rate cut supports economic growth in the 12-nation eurozone. But it also hurts the ECB's credibility with the markets because the central bank in recent months had made it clear it would not be cutting rates.

While the rate reduction buoyed European stock markets, an initial rise of the euro against the dollar was later lost. The euro peaked at one-week highs of $0.8921 before dropping to three-week lows against the dollar. It was lately trading at $0.8814.

A recent series of weak data out of the eurozone, culminating in yesterday's weak German industrial production data, likely helped prompt this morning's decision. The ECB had earlier said economic data didn't support a rate cut -- and it had concerns that cutting rates could boost inflation.

Bonanca says there are still doubts about whether European economies can outperform the U.S. economy or whether stronger growth in the U.S. will prompt European investors to send their money across the Atlantic. The

Federal Reserve has cut rates four times since the start of the New Year, in an effort to pump life back into the sagging U.S. economy. It is expected to cut rates another half percentage point when it meets next Tuesday. Rates are currently two percentage points lower than they were on Jan. 1.

The

Bank of England

also cut interest rates by 25 basis points this morning, marking the third time it has reduced rates this year. The decision was widely expected and largely overshadowed by the ECB's move.

The European markets were strong on the heels of the rate cuts. The

DAX

in Germany was lately gaining 2.34% to 6206. Germany is the eurozone's largest economy and, presumably, its recent weak industrial production report helped prompt this morning's move. The largest gainer in Europe was Finland's

Helsinki General

market index, recently climbing 3.8%.

The United Kingdom's

FTSE

rose 1.3% to 5971. And the

CAC-40

in Paris was lately up 2.3% to 5616.

While stock futures got a bit of help from news of the ECB cut before markets opened in the U.S., only limited upside is expected to make its way into the U.S. trading session today. "It's a little bit of a marginal plus, but it won't be a major consideration," Bonanca said. "I don't think that the ECB's weight in the U.S. markets compares to that of the Fed -- of course, the Fed's weight in the overseas market is very disproportionate to anyone else's weight over here."

U.S. stocks were gaining in early trading.