Europe’s principal stock markets made significant gains today. The positive activity is being ascribed to a move by the U.S. Federal Reserve Board to cut interest rates by a half-percentage point before the opening of the New York Stock Exchange.

After the close of trading in Europe, the European Central Bank cut its rates by a half-percentage point, in a co-ordinated effort with the Fed and the Bank of Canada.

London’s FTSE 100 closed 2.7% higher at 4,856.5. Frankfurt’s DAX added 4.14% to 4,286.28. The blue-chip CAC 40 index in Paris climbed 2.7% to 4,014.9.

U.S. stocks opened lower, down 600 points but have climbed back to 530.

Airline stocks across Europe continue to suffer big losses. German flag carrier Lufthansa dove 16.1%. Swissair fell 10.1%. Air France also fell. It finished the day down 10.7%. In London, Europe’s biggest airline, British Airways slid 0.2%. BA is flying 70% of its scheduled service to the U.S. from Heathrow airport and 80% from Gatwick.

Meanwhile, Virgin Airways announced that it will cancel its runs to Toronto and Chicago in mid-October.

The prospect of U.S. military action boosted the fortunes of defense and aerospace stocks. Europe’s biggest defense company, BAE Systems, added 1%. French defense firm Thales led gaining stocks in Paris by adding 1.8%.

Many insurers, which had continued their downward plight in morning trade, reversed into the black. Europe’s biggest insurer, AXA, scraped its way back to from red to black territory in Paris. It finished up 4.6 percent.

ItÕs principal rival, AGF, majority-owned by Allianz of Germany, finished flat. Allianz was the best performer on the DAX, climbing 4.8%.

Times are good for re-insurers with Germany’s Munich Re, adding 3.1%. Swiss Re, the world’s second largest re-insurer, crept up 0.4%.