The cuts were applauded by many analysts but market reaction indicated that even more sweeping moves may be needed to halt the decline.

Sweden lopped off a record 175 basis points to 2.0 per cent and the ECB slashed 75 points to 2.50 per cent, the eurozone’s biggest ever cut.

The Bank of England chopped 100 basis points for an interest rate of 2.0 percent, the lowest level since 1951, as recession loomed over Britain.

France meanwhile unveiled a 26 billion euro ($32.9 billion) stimulus plan for its faltering economy as unemployment rose, the latest European country to open state coffers to fight the downturn.

Sweden’s central bank, the Riksbank said it expected rates to remain at the new 2.0 percent level over the coming year. There was an “unexpectedly rapid and clear deterioration in economic activity since October,” it said.

The Bank of England, also taking rates to 2.0 per cent, made clear the downturn had gathered pace and conditions in credit markets remained difficult.

Earlier on Thursday, New Zealand sliced interest rates by a record 150 basis points to a five-year low of 5.0 per cent and said it would probably have to trim again. Indonesia also made a surprise cut in its key interest rate, by 25 basis points to 9.25 per cent, the first since December 2007 as the government sought to protect the economy.

In trading that closed before the European rate cuts, Asian shares fell as investors braced for a sharp turn lower in the global economy and sought safety in US government debt.