European shares have risen and the euro has struggled following a surprisingly large cut in euro zone interest rates.

Share indices in Britain, France and Finland surged to all-time highs in early trade after the European Central Bank sliced half a percentage point off its main refinancing rate on Thursday and US blue chips closed at record levels. However trading was muted in Dublin and the ISEQ index rose just 0.8 per cent.

A weak start on Wall Street, where the Dow Jones Industrials Average fell 0.75 per cent in early trade, led to some retracement in European stocks. European markets ended in positive territory.

The dollar was stronger against the euro, which was already weakening in the wake of the euro zone rate cut. Optimism that the easing would boost the euro by improving the European economy was eroded by a perception that the ECB seemed prepared to accept a soft currency.