NEW YORK (AP) - The Dow Jones industrial average jumped 208 points Thursday after Greece scrapped a referendum on unpopular budget cuts and the European Central Bank unexpectedly cut interest rates. It was the second straight day of big gains in the stock market.
The European Central Bank surprised markets by cutting its benchmark interest rate a quarter of a percentage point, to 1.25 percent. The bank had increased its key rate twice this year, but that was before Mario Draghi took over as head of the bank this week. The announcement sent stocks higher as investors hoped that lowering borrowing costs would help prevent a recession in Europe.
Buying intensified in the early afternoon after Greek Prime Minister George Papandreou abandoned his effort to put package of austerity measures to a public vote. A "no" vote could have caused chaos in the European financial system by leading to a messy default on Greece's debt.
Investors and other European nations were shocked by Papandreou's announcement Monday that he would call a referendum on a financial rescue package worked out just last week after months of negotiations between Greece and its international lenders.