By Ellis Mnyandu
NEW YORK (Reuters) - Stock index futures pointed to a sharply higher open on Thursday after several central banks followed the U.S. Federal Reserve in lowering interest rates, buoying hopes the actions will lessen the impact of a global recession.
While the actions should drive down the costs of borrowing, more and more data suggest that a slew of recent efforts to unlock jammed credit markets are slowly freeing up cash needed to lift the economy out of the downturn.
Buyers looked set to wade back into the market in search beaten-down shares following overnight gains in Asia, and a jump in European benchmark indexes.
The Fed cut its benchmark fed funds rate by half a percentage point to 1 percent on Wednesday, action that was soon followed by cuts in Taiwan and Hong Kong.
Japan is expected to cut rates on Friday, while the European Central Bank, Australia and the Bank of England are expected cut rates next week. China also cut on Wednesday.
Interest-rate sensitive stocks, including banks, rose, with shares of Citigroup
"Central banks are trying to lower rates low enough to push the money out into the system," said Rick Meckler, president of investment firm LibertyView Capital Management in New York. "It probably will work. It's just that we've reached such a depressed level that this still leaves people nervous."
S&P 500 futures rose 26.60 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 climbed 276 points, and Nasdaq 100 futures shot up 36 points.
Investors will pore over the government's first estimate of change in third-quarter real gross domestic product, which measures the output of all goods and services within U.S. borders.
The data, due at 8:30 a.m., are expected to show the first contraction in the economy since the fourth quarter of 2007, a 0.5 percent decline. The government will also report on first-time weekly unemployment benefits claims.
In earnings news, consumer products company Colgate-Palmolive Co
The costs for bank to borrow dollars from each other over three months fell for a 15th straight day on Thursday, suggesting efforts to restore confidence in the credit markets are beginning to bear fruit.
U.S. stocks fell on Wednesday as a big rally faltered in the last minutes of trading on worry about General Electric's
(Reporting by Ellis Mnyandu, Editing by Kenneth Barry)
