Economic Outlook: Policy focus on Europe

Six central banks said they would coordinate action to add liquidity to financial markets, giving U.S. futures a boost and pushing stocks in Europe higher.

The FTSE 100 index in Britain added 2.94 percent to 5,493.88, while the OMX index in Sweden jumped 3.42 percent. The DAX 30 index in Germany rose 5.04 percent to 6,092.22. The CAC 40 in France caught the wave, rising 4.07 percent.

Markets in Asia were closed before the U.S. Federal Reserves early morning announcement and could not gain on the news. The S&P/ASX in Australia rose 0.43 percent, but the Shanghai composite index in China dropped 3.27 percent to 2,333.41

The Hang Seng index in Hong Kong lost 1.46 percent to 17,989.35. The Sensex index in India rose 0.72 percent to 16,123.46.

In Japan, the Nikkei 225 index shed 0.51 percent to 8,434.61.

The Fed said the European Central Bank and the central banks of Canada, Britain, Japan and Switzerland had agreed to lower the cost of existing dollar swap lines by 50 basis points beginning Dec. 5.

The Bank of China Wednesday said it was reversing a policy of tighter lending restrictions by lowering bank reserve requirements by a half of a percentage point, The New York Times reported.

In effect, both the Bank of China and the six western central banks are acknowledging that the debt crisis in Europe has undermined financial markets on a global scale. China is stepping up to the plate to increase demand on the domestic front. The western central banks are providing liquidity in part to offset the higher borrowing costs across Europe.

All of this is underscored by the largest general strike in Britain among public workers in decades that has shut down schools, hospitals and other services Wednesday.

As Britain faces slower growth and continued austerity measures, public sector workers reacted Wednesday after Chancellor of the Exchequer, George Osborne, told members of Parliament that the country's "debt will not fall as fast as we'd hoped."

"We'll do whatever we can to protect Britain from this debt storm," Mr. Osborne said. However, "If the rest of Europe heads into a recession, it may be hard to avoid one here."

Britain is already predicting growth that is anemic at best. The Office of Budget Responsibility said Tuesday that the country's gross domestic product is expected to grow 0.9 percent this year, a projection cut almost in half from its previous 1.7 percent forecast.