* FTSEurofirst 300 rises 1.4 pct, up for 3rd day in a row
* Sweden slashes rates by 175 bps
* Eyes on rate decisions by ECB, BoE later in the day
* For up-to-the-minute market news, click on []
By Blaise Robinson
PARIS, Dec 4 (Reuters) - European stocks reversed initial
losses to rally early on Thursday, rising for the third session
in a row as investors hoped deep interest rate cuts would help
remedy a global economic slump.
At 0926 GMT, the FTSEurofirst 300 <> index of top
European shares was up 1.4 percent at 841.15 points ahead of
rate decisions by the Bank of England at 1200 GMT and the
European Central Bank at 1245 GMT, both expected to yield big
cuts.
Sweden became the latest country to aggressively cut
interest rates, slashing its key rate by a record 175 basis
points to 2.00 percent on Thursday, in a bold move aimed at
preventing its economy from falling deeper into recession.
Earlier on Thursday, New Zealand's central bank cut rates by
150 basis points.
"Following the surprising 175 basis point (easing) by the
Riksbank this morning, we now believe you should expect at least
100 bps of easing from the ECB later this morning," said David
Mackie, head of Western European economic research at JPMorgan.
"Now the eyes are on the Europeans, and we're expecting the
ECB to go for 75 basis points," said Achim Matzke, European
stock indexes analyst at Commerzbank, in Frankfurt.
"It could help find a bottom for stocks, but to say if the
real floor is in sight, it's too early for that."
Following the Swedish central bank's move, euro zone
interest rate futures extended gains and two-year yields fell
below 2 percent for the first time in over five years while
EONIA futures moved to fully discount a 75 basis point cut from
the European Central Bank.
"Will ECB become a fashion victim? We have discovered a new
central bankers trend: cutting interest rates by 100 bps...
These interest rate cuts were huge and unexpected. On this
latest news, we expect ECB to cut by 100 bps," Oddo Securities
analysts wrote in a note.
Central banks around the world have been aggressively
cutting rates to help shield the global economy from a deep
downturn.
The FTSEurofirst 300 has lost 44 percent so far this year,
hit by fears of a prolonged recession triggered by a crisis in
the financial sector.
Recently-hammered banking stocks were among the biggest
gainers on Thursday, with the DJ Stoxx banking index up 2
percent. UBS <UBSN.VX> gained 5.4 percent, Barclays <BARC.L>
rose 5.9 percent and Societe Generale <SOGN.PA> added 4.2
percent.
Credit Suisse <CSGN.VX> surged 7 percent after saying it was
cutting another 5,300 jobs. It also revealed it made a net loss
of about 3 billion Swiss francs ($2.5 billion) in October and
November.
Food and beverage stocks were also among the biggest
gainers, with Nestle <NESN.VX> up 1.8 percent and Diageo <DGE.L>
up 5 percent.
Shares in the embattled auto sector were also on the upside,
with BMW <BMWG.DE> gaining 3.4 percent, Fiat <FIA.MI> up 2.8
percent and Renault <RENA.PA> surging 6.2 percent.
Around Europe, UK's FTSE 100 index <> gained 1.6
percent, Germany's DAX index <> rose 1.9 percent, and
France's CAC 40 <> added 1.7 percent.
German steelmaker Salzgitter <SZGG.DE> soared 7.8 percent
after Deutsche Boerse said late on Wednesday the company will
join Germany's top-30 stock market index <>.
(Reporting by Blaise Robinson; editing by John Stonestreet)
