Huge Day For European Markets

Arenamontanus / FlickrThis morning, the release of worse-than-expected German manufacturing PMI data indicated that the contraction in Germany's manufacturing sector is picking up speed in April.

Just last week, Bundesbank President and ECB Governing Council member Jens Weidmann hinted that an ECB rate cut could be in the cards if new economic data warranted such action.

The way euro zone stock markets surged and government bond yields tumbled today, it seems like markets think a rate cut next week is a done deal.

Here's a quick roundup of the action:

• French stocks: +3.5%; 10-year government bond yields -1 basis points
• German stocks: +2.4%; 10-year yields +2 basis points
• Spanish stocks: +3.2%; 10-year yields -21 basis points
• Italian stocks: +2.7%; 10-year yields -11 basis points

Markets also hit a few notable milestones.

French 10-year government bond yields fell to an all-time low.

The Spain-Germany 10-year yield spread narrowed to less than 300 basis points.

The Stoxx Europe 600 rose 2.4%, its biggest gain in eight months.