The European Central Bank has made another attempt to revive Europe's flagging economy by slashing its key interest rate to a record low.
The ECB cut its benchmark interest rate to 0.5% from 0.75% as Britain's biggest trading partner struggles to recover from a stifling recession.
The widely expected rate cut was matched with an extension of unlimited cheap loans to banks, and ECB president Mario Draghi left open the possibility of cutting rates even further. Economists said an interest rate cut to 0.25% is "far from inconceivable".
The ECB also did not rule out taking its deposit rate into negative territory - which would encourage banks to lend rather than park cash with the ECB.
Europe is stuck in an economic rut as debt-laden countries, shrinking growth and stubbornly high unemployment threaten to further destabilise the single currency area. The eurozone's manufacturing sector contracted markedly in April, data showed, while recent figures showed economic sentiment also fell in April for the second month running. Figures earlier this week - which showed eurozone consumer price inflation plunged to 1.2% in April while unemployment rose to a record 12.1% in March - also underlined the region's woes.
Mr Draghi said: "The cut in interest rates should contribute to support prospects for a recovery later in the year. Against this overall background, our monetary policy stance will remain accommodative for as long as needed."
However, few expect the rate cut to make a serious difference to growth, with the eurozone likely to remain stuck in recession when first-quarter figures are published later this month.
Chris Williamson, chief economist at Markit, said: "The cut is a symbolic gesture to reassure struggling eurozone countries that it is actively seeking to revive growth. There is little evidence to suggest the rate cut will feed through to lower interest rates in the troubled peripheral countries, which have remained stubbornly high compared to rates in core countries such as Germany, where lending is seen as a safer bet by banks."
The ECB held rates at 0.75% for 10 months before cutting them to 0.5%. It joins the Bank of England in cutting rates to 0.5% - where they have been held since March 2009.
Europe's struggles have weighed on Britain, although it managed to grow by 0.3% in the first quarter, avoiding a damaging triple-dip recession. The ECB's decision gave sterling a boost against the euro, rising 0.7% to make a pound worth 1.19 euro.