* FTSEurofirst 300 up 1.3 pct, Euro STOXX 50 up 1.3 pct
* Central banks' supportive comments calm investor nerves
* Russel Investments upgrades European shares after selloff
By Francesco Canepa
LONDON, June 25 European shares rebounded from
seven-month lows on Tuesday as supportive comments from central
banks eased concerns over a tightening of global monetary
conditions and stress in the debt market.
The pan-European FTSEurofirst 300 index rose 1.3
percent to 1,128.80 points by 1020 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 and two U.S. Federal Reserve
officials downplayed the notion of an imminent end to monetary
Adding to the reassuring comments, a European Central Bank
executive board member said Frankfurt needs to ensure euro zone
bond yields are not adversely affected by the Federal Reserve's
plan to dial back its stimulus programme.
"They're trying to calm things down without being too
influential with the direction," Wouter Sturkenboom, investment
strategist at Russel Investments, said.
"Central banks knew what they did and I don't think they're
overly concerned with the market movement, but they don't want
it to spin out of control either."
Russel Investments, which manages $180 billion, upgraded
European shares to "neutral" from "underweight" this week,
judging a 12 percent correction in the Euro STOXX 50
index since late May had left the index trading at attractive
The Euro STOXX 50 trades at 11 times expected earnings for
the next twelve months, a level not seen since before the rally
peaked in May and off highs of nearly 12 seen in 2009, Thomson
Reuters Datastream showed.
The index was up 1.3 percent at 2,544.78 points.
Among battered euro zone blue chips rebounding on Tuesday,
traders highlighted German auto makers Daimler and
Volkswagen <VOWG_ p.DE>, which shed around 15 percent since May,
and French builder Vinci, initiated with a "buy"
recommendation by Berenberg.
In the broader FTSEurofirst 300 index, chip maker Arm
Holdings rose 3.1 percent as a 30 percent fall in the
past month triggered an upgrade to "buy" from "hold" at
It topped Britain FTSE 100 index, which was up 1
percent at 6,086.53 points.
Rob Colville, head of technical trading firm The Lazy
Trader, advised his clients to take profit on their short
positions on the UK index after it hit a target at 6,100, a top
tested in 2011 which was now serving as support.
"If you wanted a higher-probability, lower-reward profit
outcome then it makes sense to cash out now as we have hit the
first profit target," Colville said.
"If you accept a lower probability for a higher reward then
wait for price action to reach (previous lows at roughly 5,900
Short sellers borrow a security and sell it, betting they
will be able to buy it back at a lower price before returning it
to the lender, pocketing the difference.