European shares rose on Tuesday, recovering some poise after a sharp sell-off the previous day on concerns about China’s economy that saw around €450 billion ($520 billion) wiped off the value of leading stocks.
The pan-European FTSEurofirst 300 index, which slumped 5.4 per cent on Monday, rose 2.5 per cent, while the euro zone’s blue-chip Euro STOXX 50 index gained 2.3 per cent.
Swiss agricultural chemicals maker Syngenta was the best-performing FTSEurofirst stock, rising 7.5 per cent after a source said Monsanto had sweetened a takeover.
The FTSEurofirst remains at risk of posting its biggest monthly loss since 2002, having fallen more than 10 per cent so far in August.
Germany’s DAX rose 2.3 per cent after a near 5 percent decline on Monday, leaving it still nearly 20 per cent below a record high reached in April.
World financial markets have been rattled by a sharp sell-off in the Chinese stock market that followed the devaluation of the yuan earlier this month.
Chinese shares slumped again on Tuesday, while Japan’s Nikkei fell nearly 4 per cent.
“European equity markets are showing hesitant signs of trying to stage an early rebound,’’ said Peregrine & Black senior sales trader Markus Huber.
“However, with Chinese markets getting hit once again today and overall confidence in markets being fairly low, it needs to be seen if the current bounce is only of a temporary nature or if we have indeed finally seen the lows of the current down-move.’’
Goldman cuts equities position
Goldman Sachs’ strategists have cut their position on equities to ‘neutral’ from ‘overweight’ due to the impact of the drop in China, though they did not expect the sell-off to cause a global recession, partly due to signs of economic growth in the United States and Europe.
“In the meantime, we recognise the shift in sentiment that is being reflected in recent price action both in equities and, via falling inflation expectations, in bonds,’’ they wrote in a note.
Trading volumes on European stock markets had surged on Monday to their highest level in nearly a year.
However, volumes were more subdued on Tuesday, with those on the Euro STOXX 50 and DAX coming in below their 3-month daily averages.
($1 = 0.8642 euros)