European markets have not reacted with confidence following a more-dovish-than-expected decision by the European Central Bank to cut its deposit rate to just minus 0.3 per cent.
The FTSE 100 was trading 1.07 per cent down at 6,352 points in early afternoon trading, while the German Dax was 2.6 per cent lower at 10,891 points. The French CAC 40 was down 2.13 per cent at 4,801 points.
Meanwhile, the pan-European STOXX 600 slipped 1.97 per cent.
Members of the ECB’s governing council cut the central bank's deposit rate to minus 0.3 per cent from minus 0.2 per cent.
ECB president Mario Draghi also announced today that the central bank had extended its asset purchase programme into 2017.
The euro shot up to a value of 71.270p from 70.599p on the news, which suggests markets were disappointed, as many analysts expected the deposit rate to be cut to minus 0.4 per cent.
In response to a journalist's question of whether the ECB should be doing more, Draghi replied: "We are doing more because it works, not because it fails. We want to consolidate something that has been a success."
He said a recovery was underway, due to measures undertaken.
But Naeem Aslam, chief market analyst at AvaTrade, said: "Mario Draghi did what he does best - which is nothing but talk a lot. Looking at the euro dollar chart, one thing is clearly evident that shorts are getting squeezed out of the market and this why we have such a massive upside move. The wider expectations were that Draghi is going to come with his guns blazing but today is certainly not the day for that."