European stocks rebound after Wall Street inspired sell-off

AP News
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Posted: Mar 11, 2015 8:29 AM
European stocks rebound after Wall Street inspired sell-off

LONDON (AP) — European markets rebounded strongly Wednesday from a big sell-off when investors fretted over a looming U.S. interest rate hike.

KEEPING SCORE: In Europe, Germany's DAX was up 1.7 percent at 11,697 while the CAC-40 in France rose 1.8 percent to 4,971. The FTSE 100 index of leading British shares underperformed its peers, trading only 0.1 percent higher at 6,708. Wall Street was poised for a solid opening, with both Dow futures and the broader S&P 500 futures up 0.2 percent.

ANALYST TAKE: "Bargain hunters appear to be out in force, as once again corrections in equity markets are being viewed as buying opportunities," said Alastair McCaig, market analyst at IG. "Yesterday's triple-digit falls seen in European equity markets appear to have been quickly forgotten, with many viewing this as a buying opportunity rather than a precursor to tougher times."

FED FEARS: On Tuesday, stocks in Europe and the U.S. took a battering as investors worried about the prospect of the Federal Reserve's first interest rate hike in nine years. Those odds got a boost after recent data revealed a strengthening job market. Low interest rates and other monetary stimulus have supported stocks for several years but a rate hike from the Fed will foreshadow a return to more levels for credit costs.

EURO SLIDE: The euro has been one of the financial assets most affected by the prospect of higher U.S. rates. That's because the European Central Bank is embarking on a distinctly different path. On Monday, months after the Fed brought its last stimulus to an end the ECB started buying certain government bonds in the markets. The hope is the 18-month 1.1 trillion-euro ($1.12 trillion) monetary stimulus will shore up the economic recovery in the 19-country eurozone and get inflation back into the system. On Wednesday, it fell to $1.0560, its lowest level since April, 2003. "The next target sits at 1.0500 the March 2003 lows and it remains a very short hop from there to parity," said Michael Hewson, chief market analyst at CMC Markets.

CHINA FOCUS: Investors examined the latest batch of monthly economic data on China for clues on the state of the world's No. 2 economy. Industrial output for January and February rose 6.8 percent, according to the official Xinhua news agency. The number was less than analysts expected. Retail sales and fixed-asset investment also disappointed. China's economy is expected to slow further after growing 7.4 percent last year, the lowest growth rate in nearly a quarter-century. The government issues the figures for both months together to smooth out distortions from Lunar New Year, which can fall in either month.

ASIA'S DAY: Japan's Nikkei 225 gained 0.3 percent to close at 18,723.52, getting some relief from the regional down trend as the dollar strengthened against the yen. South Korea's Kospi lost 0.2 percent to 1,980.83 and Hong Kong's Hang Seng slipped 0.8 percent to 23,717.97. The Shanghai Composite Index in mainland China swung between gains and losses before edging up 0.2 to close at 3,290.90.

ENERGY: Benchmark U.S. crude rose, climbing 18 cents to $48.47 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many U.S. refineries, rose 44 cents to $57.32 in London.