European shares inch higher as investors weigh stimulus measures

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(Reuters) – European shares struggled for direction on Wednesday as investors wondered if the European Central Bank and euro zone governments would green light stimulus measures after the U.S. Federal Reserve cut interest rates in an emergency move.

The Fed’s rate cut by 50 basis points on Tuesday sent Wall Street tumbling, magnifying the extent of the coronavirus fall-out. The pan-European index rose 0.2%, with gains capped by dismal data showing China’s services sector had its worst month on record in February.

All the main regional indexes were slightly higher, but Italian shares () moved up only 0.1%. Italy’s health authorities said they may set up a new quarantine red zone to try to contain the outbreak in Europe’s worst-hit country, after the death toll and the number of cases jumped.

Traders now see a 90% chance the ECB will cut rates next week, while policymaker Francois Villeroy de Galhau on Tuesday called on governments for more fiscal help.

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