European stocks climbed but the euro sank to a more than one-year low Thursday after the European Central Bank opted to cut interest rates as part of the battle against low inflation in the euro zone.

ECB decision: Policy makers at the central bank cut three key interest rates by 0.1% percentage point each. The refinancing rate was lowered to 0.05%, the marginal lending rate to 0.3% and the rate on the deposit facility to negative 0.2%. The ECB made no comment on new quantitative-easing measures. ECB President Mario Draghi will hold his regular news conference at 1:30 p.m. London time, or 8:30 a.m. Eastern.

Market reaction: The euro (EURUSD)dropped against the U.S. dollar, trading below the $1.31 level for the first time since July 2013, according to FactSet data. The shared currency bought $1.3033 compared with $1.3132 on Wednesday.

The Stoxx Europe 600 rose 0.7% to 347.63, touching intraday highs after the ECB rate decision. The benchmark turned higher early in afternoon trade following a Reuters report the European Central Bank was considering plans to launch an asset-backed securities program worth up to 500 billion euros ($637 billion).

Investors will watch Draghi's press conference for any news that he and his colleagues will launch full-scale quantitative easing, but other options are available, such as a "private QE" program, say economists.

Among movers on the Stoxx Europe 600, Standard Life headed advancers on the benchmark, surging 7.7% on the insurer's plan to return 1.75 billion pounds ($2.88 billion) to investors as the company agreed to sell its Canadian assets to Manulife Financial .

Bilfinger SE shares were the worst performers, falling 9.3% after the German construction and services company issued a warning on profit for the third time in three months.

On the country indexes, Germany's DAX 30 index turned higher by 0.4% to 9,661, and France's CAC 40 rose 1% to 4,466. The U.K.'s FTSE 100 picked up 0.2% to 6,883. The Bank of England on Thursday held its key interest rate at 0.5%, as expected.

The Stoxx 600 on Wednesday climbed 0.7% after Russian President Vladimir Putin said he and Ukrainian President Petro Poroshenko agreed to the outlines of a cease-fire plan between Kiev's forces and pro-Russian separatists fighting in eastern Ukraine. Further talks will be held Friday.