European stocks rose Wednesday, cheered by a further
stabilization in Chinese equity markets, but trading volumes were
expected to remain thin and investors cautious ahead of a policy
statement from the U.S. Federal Reserve later in the day.
The Stoxx Europe 600 added 0.6% early in the session, building
on Tuesday's 1.1% gain. China's shares oscillated between gains and
losses Wednesday as officials stepped up efforts to calm markets on
the back of three days of selling that has knocked 11% off the
value of China's main stock index and severely unnerved global
investors.
"Sentiment towards China remains highly volatile," said Ian
Williams, an economist and strategist at brokerage Peel Hunt in
London. He added, however, that investors broadly appear calmer
early Wednesday than they might have a day ago.
Gains in Europe were also spurred by some of
stronger-than-expected corporate earnings.
Shares in British American Tobacco PLC rose close to 3% after
the maker of Dunhill and Lucky Strike cigarettes r eported higher
first-half profitbuoyed by investments that helped offset currency
losses.
Shares in Barclays PLC also rallied after the lender reported a
sharp rise in second-quarter net profit compared with the
year-earlier period and announced it was scrapping its dividend
target to retain capital.
Later in the session, investors' attention will focus on the
U.S. Fed's policy statement.
Chairwoman Janet Yellen isn't scheduled to host a news
conference and the Fed won't publish any fresh economic
projections, but officials could give some hints about the
economy's trajectory and the outlook for policy.
Paul Donovan, an economist at UBS, said there is no expectation
for a change in policy Wednesday but market participants will be
waiting to see whether the Fed signals an intention to raise
interest rates as early as September.
"What we are likely to get is a Fed that emphasizes data
dependency, and this therefore perhaps makes the forthcoming data
more important than the Fed decision today," he wrote in a note to
clients.
A first reading for second-quarter U.S. gross domestic product,
the broadest sum of goods and services produced across the economy,
is due Thursday.
The euro was 0.2% lower against the dollar in early trade at
$1.1034. The dollar was also little changed against Japan's
yen.
In commodity markets, Brent crude was 0.8% lower at $52.86 a
barrel having already Tuesday hit its lowest level since January on
concerns about the persistent global oil glut. Gold was 0.1% higher
at $1,097.40 per troy ounce.
Write to Josie Cox at josie.cox@wsj.com
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