The European Central Bank raised its interest rates by 25 basis points, the 10th hike in a series which began last July.

The rise takes its deposit rate to a historic 4% and the marginal lending rate to 4.75%.

“Inflation continues to decline but is still expected to remain too high for too long,” said the ECB.

“In order to reinforce progress towards its target, the Governing Council today decided to raise the three key ECB interest rates by 25 basis points.”

Experts had expected the ECB to hold rates steady to keep economic growth intact. However, with the ECB now expecting inflation to stay well above its target next year, analysts say it has been made increasingly difficult for the central bank to not act.

Forecasts for the region’s economic growth were revised to 0.7% for the current year and 1% and 1.5% for the subsequent two years.

Shares in UK-based chip designer Arm Holdings soared after the firm made its Nasdaq debut on Thursday.

The Cambridge-based firm’s stock opened at $56.1 (£45.2) per share – 10% above the initial public offering (IPO) price of $51 (£41).

Arm, which is still 90.6% owned by Japan’s SoftBank Group, had earlier secured a valuation of $54.5bn (£43.6bn) on Wednesday.

That has now leapt to almost $60bn (£48bn) after trading opened at 2.30pm UK time on Thursday. The IPO is the biggest for Wall Street since Rivian’s market debut in 2021.

In London, miners were in the spotlight after a positive assessment from JPMorgan Cazenove. Rio Tinto saw a 4.73% jump after being upgraded, while Anglo American leapt 7.86% and Glencore was up 4.36%.

The FTSE 100 index climbed 1.95% to finish at 7,673.08.