The US Federal Reserve has announced a surprise cut in interest rates as an emergency measure to shield the US economy from the growing impact of the coronavirus epidemic. Stocks surged after the news.

In a statement on Tuesday, the central bank said it was cutting rates by half a percentage point to a range of 1-1.25 percent.

It said the “fundamentals of the US economy remain strong” but noted that the coronavirus “poses evolving risks to economic activity.” It added that developments were being closely monitored and that the Fed would “act as appropriate to support the economy.”

The Dow Jones and S&P 500 both gained about 1.2 percent, while the Nasdaq was up 1.1 percent. European stocks were also up by around 3 percent after the US Fed rate cut was announced.

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