Australia’s central bank gave financial markets a much-needed fillip yesterday by slashing its main interest rate by a full percentage point.

The benchmark S&P/ASX 200 index rallied 1.7 per cent to 4,618.7, having been as much as 3.3 per cent lower ahead of the surprise move from the Reserve Bank of Australia, which took the country’s main base rate down to 6 per cent from 7 per cent.