European shares recover from rough ride

European stock markets up almost 1 percent on Wednesday.

London - European stock markets recovered from a rough start to the week on Wednesday, rising almost 1 percent as traders pointed to intervention in China that helped calm wobbly markets and hopes for more central bank action.

European equities have suffered a bruising end to the summer, down more than 2 percent since the end of August and down more than 10 percent since the end of July, but brokers and investors say there is still value in high-yielding blue-chip stocks at a time of central bank bond-buying in the euro zone.

The pan-European FTSEurofirst 300 index was up 0.7 percent, at 1,402.89 points, at 07h33 GMT. National benchmarks in London, Paris and Frankfurt were trading broadly in line.

China, the epicentre of worries over the global growth outlook, enjoyed a late-stage market recovery after fresh supportive measures from brokerages that eased investor fears that Beijing may be intensifying a trading crackdown. An upcoming public holiday will also bring respite, traders said.

“We have seen a late recovery in Asia that has largely been as a result of some late state intervention in Chinese markets to help keep a floor under stocks,” said Michael Hewson, analyst at CMC Markets.

Traders also said that hopes were growing for more central bank action in the wake of the recent surge in market volatility. Bets that the US Federal Reserve could raise rates as early as this month are being scaled back, while the ECB is expected to take a more dovish stance after its policy meeting this week, they said.

“(ECB chief) Mario Draghi will probably hint, if not say, that if markets continue being in turmoil there will be more QE (bond-buying),” said Markus Huber, trader at brokerage Peregrine & Black.

Deal-making hopes also propped up equities, with Alstom up 3 percent after a report in the Financial Times said its sale of energy assets to General Electric was set to get the green light. Tesco shares were slightly higher after sources said it had picked a preferred buyer for its South Korean business.

ASOS shares fell more than 3 percent after its chief executive stepped down after 15 years in which he transformed the internet minnow into a retail powerhouse.

REUTERS