EUROPEAN STOCKS REBOUND AFTER WORST DAY SINCE 2008

Traders of European equities are snapping back, pushing shares up after their biggest slump since the depth of the financial crisis.

Today’s rebound is just as broad-based as yesterday’s slump, with almost all the shares in the Stoxx Europe 600 Index up. The gauge rallied 4.3 percent at 11:31 a.m. in London, extending gains after China’s central bank increased stimulus measures.

“What happened yesterday was purely panic,” said Peter Dixon, a global economist at Commerzbank AG in London. “Investors realized it was overdone and that it may represent a decent buying opportunity. What’s supportive for European markets is the ECB still pumping money into the system. And let’s not forget that the European economy is an economy which is recovering from a crisis rather than going into one.”

Germany’s DAX Index rose 4.4 percent after closing on Monday in a bear market, and the U.K.’s FTSE 100 Index added 3.4 percent, rebounding from its lowest level since 2012. Most western-European markets rallied more than 2.5 percent on Tuesday.

German business confidence unexpectedly climbed in August as companies brushed off concerns that China’s slowing economy will drag on global growth.

Stock Rebound

Shares are rebounding after the rout started in China spread across markets, sending all but three companies in the Stoxx 600 down on Monday. The benchmark gauge of European equities plunged as much as 8.1 percent before paring losses to 5.3 percent. It finished the day 17 percent below its April record, erasing gains for the year. As of yesterday’s close, 17 out of 18 western-European markets had lost 10 percent or more from their high.

With the Stoxx 600 at its lowest level since January on Monday, the gauge traded at 14.6 times estimated profit, down from 17.4 times in April, after the European Central Bank began quantitative easing to support the economy. Now a technical level indicates the losses might have been too extreme and equities may snap back. That’s probably what investors who poured $90 billion in European equity funds this year are hoping for.

Syngenta AG jumped 9.4 percent as people familiar with the situation said Monsanto Co. has made an increased takeover offer to the Swiss pesticide producer. RSA Insurance Group Plc climbed 4.6 percent after Zurich Insurance Group AG proposed to buy it.

BHP Billiton Ltd. rallied 8.2 percent after the the world’s biggest mining company said it will increase its dividend, even with commodities near their lowest levels since 1999. Abengoa SA surged 24 percent after a report that 10 percent of its capital increase will be in Class A shares, while the previous one was only with Class B shares. Royal DSM NV added 4.9 percent after the Dutch maker of nutritional products said it will cut jobs.

source:Bloomberg