By Edward Krudy
NEW YORK (Reuters) - Stock index futures surged on Thursday after the Chinese central bank cut its benchmark bank lending and deposit rates, adding to hopes of coordinated action to aid the flagging global economy and further boosting a rally in the previous session.
China's central bank cut benchmark interest rates by 25 basis points in a surprise move on Thursday to shore up slackening economic growth, its first rate cut since the depths of the 2008/09 financial crisis.
The move comes just before Federal Reserve Chairman Ben Bernanke appears on Capitol Hill later Thursday for scheduled testimony before a Congressional committee. Investors will parse his words closely after his number two, Janet Yellen, laid out the case for the Fed to provide more support to the fragile economy.
"China's move should help support the stocks rally that we have seen in the market over the past days," said Keith Bowman, equity analyst at Hargreaves Lansdown in London.
"Investors will also look for hints later in the day for any stimulus from the Federal Reserve. But the whole European scenario still overhangs," he said.
On Wednesday stocks jumped more than 2 percent, giving the S&P 500 its best day since December, as talk of a rescue of Spain's troubled banks and hopes for more monetary stimulus sparked a rebound from recent selling.
S&P 500 futures rose 9.6 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 53 points, and Nasdaq 100 futures rose 12.50 points.
After the S&P 500's 6 percent fall in May and with the index below its key 200-day moving average, the market was ripe for a rebound, analysts said. The index has reversed sharply above that closely watched level.
European stocks jumped 1.3 percent in morning trade, adding to the previous session's sharp rally, following the China rate cut and as investors bet policymakers in Europe could soon unveil measures to prop up ailing Spanish banks. <.EU>
Even though Spain has not yet requested assistance and is resisting being placed under international supervision, Germany and European Union officials are urgently exploring ways to rescue the country's banking sector, sources said.
Spain met strong demand when it sold 2.1 billion euros ($2.62 billion) of medium- and long-term bonds, passing a key test of its ability to tap investors after a minister said earlier this week the country was being cut off from the markets.
Green Mountain Coffee Roasters Inc
Chesapeake Energy Corp
May's stock market rout dealt a blow to many on Wall Street including several big hedge fund stars whose bets on prominent companies looked badly timed.
Oracle Corp
(Reporting By Edward Krudy; Editing by Chizu Nomiyama)
