The European Central Bank will cut its key interest rate to a record low next week as the euro-region economy slumps, according to banks including Nomura International Plc, UBS AG and Royal Bank of Scotland Group Plc.

Economists forecast a reduction for May after gauges of manufacturing and services activity for April underscored weakness in output. Germany 's Ifo index of business confidence fell more than economists predicted, the institute said today. ECB policy makers have also indicated they may consider a rate cut at their May 2 meeting. President Mario Draghi said on April 19 he hasn't seen any improvement in economic data in the region as a whole, after hinting at the beginning of the month he might lower borrowing costs if the recovery faltered.

Executive Board member Joerg Asmussen said a day later that it could lower rates if data show a need for it. “The disappointment from the latest data increases further the downside risks to the ECB's baseline scenario and increasingly challenges the pace of the gradual recovery expected,” said Nick Matthews, an economist at Nomura in London . “We see the mention by Mr. Draghi that the ECB ‘stands ready to act' as a clear statement that the ECB is prepared to cut next month.”

Eoin Treacy's view When Mario Draghi took the helm of the ECB he committed to doing whatever was necessary to ensure the survival of the Euro. Since then the ECB has made unprecedented quantities of credit available to the banking sector and supported the debt markets of peripheral countries through outright purchases.

Following 15 consecutive months of contraction in the Eurozone's economy, low inflationary pressures in many countries and deteriorating perceptions of growth potential, the case for an interest rate cut is well made. Assuming that the ECB follows through on the market's current expectations for a cut we can conclude that the commitment to do what is necessary remains very much in evidence and that liquidity will remain abundant.

Many European equities have borne the brunt of the corrective phase which has been in evidence since late January. As a result valuations have returned to relatively attractive levels. In yesterday's Comment of the Day I highlighted the valuations of Volkswagen which has found at least short-term support in the region of the underlying trading range. I thought that today it might be instructive to highlight other European companies which now have attractive valuations.

In order to do this I searched on Bloomberg for Western European companies that have a Bloomberg Estimated P/E for this year of less than 8, pay a dividend and have a market cap of greater than $1 billion. Here is the list of 50 companies.

The energy, mining, banking, insurance, telecoms, auto manufacturing and auto parts sectors dominate the list. Some of the more interesting chart patterns are represented by:

In the tyre sector, Michelin has a forward P/E of 7.32 and yields 3.41%. The share posted a large upside key day reversal yesterday, from the region of the upper side of the underlying trading range, and a sustained move below €57 would be required to question potential for a further rebound.

In the banking sector, Barclay's has a forward P/E of 7.76 and yields 2.29%. 60% of the bank's revenue is derived outside the UK but it announced lower than expected group profits this morning not least because of restructuring costs and ongoing pressure in its European division. The share found support earlier this month in the region of the 200-day MA and a sustained move below 275p would be required to question medium-term potential for additional higher to lateral ranging.

In the insurance sector, Aegon has a forward P/E of 7.42 and yields 4.18%.The share has held a progression of higher reaction lows since September 2011 and found support this week in the region of the 200-day MA. A sustained move below €4.40 would be required to question medium-term scope for additional higher to lateral ranging.

France listed Total Gabon has a forward P/E of 6.16 and yields 5.59%. The company represents Total's operations in Gabon and other investments in that country. The share has held a progression of higher major reaction lows since late 2008 and broke emphatically above €400 earlier this year. It is currently pulling back towards the ascending 200-day MA. A sustained move below €400 would be required to begin to question medium-term scope for additional upside.

Rio Tinto has a forward P/E of 7.42 and yields 3.32%. The share has fallen back to test the lower side of its 18-month range and firmed today from the region of 2750p. A sustained move below that level would be required to question potential for an additional bounce.