European markets were higher on Friday after the US Federal Reserve cut the discount rate at which the Fed lends money to banks from 6.25 percent to 5.75 percent.

While the Fed’s move didn’t affect the benchmark interest rate, which remained at 5.25 percent, the announcement that came with the discount rate cut said that risks to growth have increased.

The FTSE Eurofirst 300 was up 2.44 percent to 1,475.99, while the Dax gained 1.49 percent to 7,378.29 in Frankfurt, the Paris CAC-40 was up 1.86 percent to 5,363.63 and Madrid’s IBEX was 2.21 percent higher to 14,288.7.

Banks saw major gains.

Deutsche Bank (FWB: DBK; NYSE: DB) added 2.49 percent to €94.93, while Credit Agricole (Euronext: ACA) gained 3.73 percent to €27.28 and Societe Generale (Euronext: GLE) was up 3.76 percent to €118.16.

Deutsche Postbank (FWB: DBP) was 3.9 percent higher to €54.

Commerzbank (FWB: CBK) was the best performer on the Dax with a gain of 4.05 percent to €30.16, while BNP Paribas (Euronext: BNP; TYO: 8665) added 4.73 percent to €78.20.

Insurers were higher as well.

Allianz (FWB: ALV; NYSE: AZ) was up 3.53 percent to €158.51, while Axa (Euronext: CS; NYSE: AXA) gained 4.46 percent to €29.02.

Other gainers were in the utilities sector, where Suez (Euronext: SZE; NSYE: SZE) was up 2.49 percent to €37.07 and RWE (FWB: RWE) was 1.78 percent higher to €82.13.

The biggest decliner on the CAC-40 was aerospace group EADS (Euronext: EAD; FWB: EAD) dropped 2.56 percent to €19.80 on reports that a German engineering group could be interested in buying some plants that EADS is offering for sale as part of its effort to restructure.

In Europe on Tuesday, the FTSE Eurofirst 300 added 0.4 percent to 1,4740.4, closing at its highest level since May 2001.

In the insurance sector, Munich Re dropped 2 percent to €128.50. Investors and analysts were not happy with its announced buyback plan, worth €1 billion, considering that the reinsurer has excess capital estimated to be in excess of €4 billion.

The European media sector saw declines on the session. Mediaset dropped 0.2 percent to €8.92 on a downgrade as it prepares to release its third-quarter report. Morgan Stanley reduced its rating on the Italian broadcaster from “overweight” to “equal-weight”. Vivendi fell 1.4 percent to €29.60 on the news that its sales in the third quarter were short of what had been anticipated. Growth of its music publishing division and in its French mobile unit was weak, as well.

Banks did well on the day. UBS added 1.1 percent to SFr76.55, while Credit Suisse gained 2 percent to SFr80.35. WestLB raised its target price on both banks, with UBS up from SFr82 to SFr86 and Credit Suisse up from SFr77 to SFr83. Deutsche Postbank was 4.6 percent higher to €61.90 on a third-quarter report that showed net profit up 16.7 percent, with interest income up almost 14 percent.

In the oil sector, Repsol was 2.6 percent higher to €27.76. JP Morgan reiterated its “underweight” rating on the Spanish company but raised its target share price from €21.50 to €23.50.

Profit-taking sent European equities markets lower on Tuesday after Monday’s advances. Also helping the losses were weaker than expected earnings reports and downgrades from brokers. The FTSE Eurofirst 300 was 0.4 percent lower to 1,378.98.

In the banking sector, Anglo Irish Bank declined by 3.1 percent to €12.69 after a trading update that disappointed. Elsewhere in the sector, Deutsche Postbank was 1.6 percent lower to €60.60 on a downgrade from “hold” to “reduce” and a lowering of its target share price from Dresdner Kleinwort. Credit Agricole was 0.8 percent higher to €31.94 after it made an offer on Monday for the shares it does not already own in Greek insurer Phoenix Metrolife. Emporiki Bank added 1.9 percent on the news. Phoenix Metrolife is a division of Emporiki.

Insurer Alleanza declined by 3.4 percent to €9.263 after it reported that both revenue and premium income had dropped in the first half. This worried investors even though net profits were up by 28 percent. The Italian bank also said that it would not return cash to shareholders as planned. Generali, which controls Alleanza, were 0.5 percent lower to €29.34.

In the telecommunications sector, Nokia dropped 1.6 percent to €15.78 even though traders tended not to believe talk that the company will soon issue a profit warning.