* FTSEurofirst 300 index rises 1 percent
* Miners gain most on China stimulus talk
* Kingfisher jumps on plan to return capital
By Atul Prakash
LONDON, March 25 European stocks bounced back on
Tuesday, led by miners on speculation that recent disappointing
Chinese data might prompt Beijing to launch fresh stimulus to
maintain the pace of economic growth.
Encouraging updates from companies such as Europe's largest
home improvements retailer Kingfisher and British budget
airline easyJet also bolstered market sentiment.
The broader stock market was boosted by a 1.7 percent jump
in the European basic resources index. Analysts said
that any monetary easing by China, the world's biggest metals
consumer, had potential to support metal prices and improve
mining sector profits.
"The recent flow of weaker-than-expected data from China has
increased the probability of a policy response. Such a move will
calm fears regarding a sharper slowdown in the economy and that
will have a positive read-across for global growth and the
sectors exposed to China," Robert Parkes, equity strategist at
HSBC Securities, said.
"Mining is a sector that is relatively sensitive to
developments in the Chinese economy."
Miners helped the FTSEurofirst 300 index of top
European shares to gain 1 percent to 1,305.84 points by 1118
GMT, recouping the previous session's entire losses.
Global diversified miners Rio Tinto and BHP Billiton
rose 2.6 percent and 1.5 percent respectively, while
Anglo American advanced 2.8 percent, mirroring a price
rally in major industrial metals on stimulus speculation.
Recent data has put pressure on China to support the economy
to meet its growth target of 7.5 percent. A survey on Monday
showed China's manufacturing sector shrank again in March,
following weaker-than-expected industrial output figures for
January and February and a fall in exports.
Concerns over a possible economic slowdown in the world's
second-biggest economy and the impact of an eventual rise in
U.S. interest rates prompted strategists at Credit Suisse to
halve the size of their "overweight" position on global
Gerhard Schwarz, head of equity strategy at Baader Bank,
said the stimulus talk could help markets to recover, while any
relaxation on the monetary front could mean some relief for
commodities and eventually help resource-related stocks.
"We saw cyclical sectors underperforming over the last
couple of weeks and any kind of stimulus will certainly help the
cyclical sectors more."
Though shares rose, investors were still cautious as tension
between Russia and the West persisted and the negative impact of
the conflict started to be reflected in economic surveys.
Data showed German business morale fell for the first time
in five months in March as firms in Europe's largest economy
worried about the effects of the Ukraine crisis.
However, BNP Paribas said the recent geopolitical tensions,
which have slowed the strong momentum in investment inflows into
European stocks, were a temporary setback and the fundamentals
were still intact for further brisk inflows to the region.
Among other sharp movers, Kingfisher jumped 6.7
percent, the top FTSEurofirst gainer, after saying it would
return about 200 million British pounds to shareholders this
year. easyJet was up 4.9 percent after upgrading its
first-half outlook by 25 percent.
Europe bourses in 2014: link.reuters.com/pad95v
Asset performance in 2014: link.reuters.com/rav46v
Today's European research round-up
(Additional reporting by Sudip Kar-Gupta in London and Blaise
Robinson in Paris; Editing by Susan Fenton)