A look at the day ahead in European and global markets from Tom Westbrook
The European Central Bank (ECB) meets today for the first big test of policymakers' response to bank stability fears that are sweeping the globe.
In Asia the brakes came on a rout in bank shares after Credit Suisse's late-night announcement of plans to borrow as much as 50 billion francs ($54 billion) from the Swiss National Bank.
The lender called this "decisive action to pre-emptively strengthen its liquidity".
It's not entirely clear if that's reassuring or even more worrisome, but traders have initially gone with the former.
European futures rose 2%. FTSE futures rose 1.2%. Bank stocks in Hong Kong, Sydney and Tokyo opened down but crept from lows during the day.
Credit Suisse boss Ulrich Koerner said his bank's liquidity basis is "very, very strong".
But three recent U.S. bank failures highlight the brutal speed with which confidence, and deposits, can evaporate.
The ECB's response to this febrile atmosphere in financial markets - while inflation is still running hot - will be telling on policymakers' approach to the mounting stress.
It will be a tricky balance. A big interest rate hike, even if justified by economic conditions, can unleash fear that more banks - or something else - is going to break. A hold-steady or even a cut will feed fears that something very big is very wrong.
Either way, the outcome will test markets' dramatic repricing of the worldwide interest rate outlook in recent days.
Traders see a 25 basis point hike as the most likely outcome, a dramatic come-down from near certainty on a 50 bp hike only a day earlier.
Key developments that could influence markets on Thursday:
- Customers and markets' response to Credit Suisse's plans
- ECB policy meeting: Decision 1515 GMT; news conference
($1 = 0.9314 Swiss francs) (Graphic: Credit Suisse goes off piste - https://www.reuters.com/graphics/CREDITSUISSEGP-STOCKS/akveqegdgvr/chart.png)