European shares rebound on China support promise

Tue Jun 25, 2013 4:32am EDT

* FTSEurofirst 300 up 0.7 pct, Euro STOXX 50 up 0.8 pct
    * Supportive money market comments from Chinese central bank
fuel rebound
    * Arm rises as investors hunt for bargains

    By Francesco Canepa
    LONDON, June 25 (Reuters) - European shares rebounded on
Tuesday after steep falls, with some investors encouraged back
into the market by comments from China that calmed concerns
about a credit crunch there.
    The pan-European FTSEurofirst 300 index was up 0.7 percent
at 1,121.84 points at 0754 GMT, having shed 5.5 percent in the
previous three sessions on an expected curbing of U.S. monetary
stimulus and a spike in Chinese interbank rates.
    China's central bank said on Tuesday that it would guide
rates to reasonable levels. "This is some market
friendly-stuff," a senior trader in London said.
    The comments helped in autos, banking and
mining shares rise 1.3-2 percent. China is the world's biggest
consumer of raw materials.
    Chip maker Arm Holdings, which has fallen 32 percent
since late May, added 3.9 percent to 788 pence to be among the
top risers as Investec recommended investors to buy the shares
at the current cheaper price, upgrading the stock to "buy" from
"hold" and increasing its price target to 1,000 pence from 995.
    Ishaq Siddiqi, strategist at ETX Capital, said his clients
were cashing in on their short positions, or bets on a market
fall.
    But he said the trend for European shares remained negative
and expected Britain's FTSE to fall to 5,900 by Friday. 
    That index traded 0.4 percent higher at 6,053.98 points,
holding above technical support at 6,000, which served as a
resistance level in 2011-12.    
    The Euro STOXX 50 Volatility index, or VSTOXX, which
measures option prices on euro zone blue chips and is regarded
as a gauge of market tensions, eased 2.6 percent from a
nine-month high hit on Monday.
    The Euro STOXX 50 index was up 0.8 percent at
2,532.60 points.
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