By Tommy Stubbington and Clare Connaghan
European stocks extended their rally Wednesday, prompted by
expectations that authorities in Europe and China may push the
button on further stimulus measures.
The Stoxx Europe 600 index was almost 0.8% higher in early
trade, after rising 1.3% on Tuesday.
Shares have bounced back from losses earlier in the week, which
followed the latest signs of a sharp slowdown in China, amid a
growing sense that Beijing will launch new policies to boost the
economy. Investors are also expecting further support from the
European Central Bank.
A number of ECB officials on Tuesday sent strong signals that
they are considering dramatic steps to stave off dangerously low
inflation.
"Yesterday's comments are a fresh reminder that the ECB could do
a lot more, if it saw real deflation risks, and certainly wants to
convey a message that it hasn't run out of ammo," said Jan von
Gerich, a global fixed income strategist at Nordea.
Germany's DAX led the gains, climbing 1.3%, helped by data
showing German consumer confidence held at a seven-year high in
March. London's FTSE 100 added 0.5%.
The gains look set to continue when Wall Street opens, with
futures indicating a positive open Wednesday. Around 3 1/2 hours
before the start of U.S. trading, futures contracts indicated a
0.4% opening rise for the Dow Jones Industrial Average and the
S&P 500. Changes in futures don't always accurately predict
market moves after the opening bell.
In currency markets, the Russian ruble continued to bounce back
from recent heavy losses, hitting a five-week high against the
dollar of 35.330 rubles per dollar.
The Russian currency has rebounded as investors turn their
immediate focus away from the crisis in Ukraine and as Russian
companies make tax payments.
"This week's tax payments may be spurring demand by Russian
companies to convert their foreign currencies to rubles to make the
payment," said Win Thin, global head of emerging market currency
strategy at Brown Brothers Harriman.
Elsewhere, the euro continued to weaken against major peers.
In commodities markets, gold rose 0.3% to $1,315.0 a troy ounce,
while Brent crude oil was 0.1% higher at $107.09 a barrel.
In corporate news, shares in Lloyds Banking Group fell sharply
after the U.K. government sold a 7.8% stake in the bank, raising
GBP4.2 billion.
Hedge fund firm Man Group was also among the fallers after
Citigroup cut its trading recommendation to sell from neutral.
Standard Life was one of the top risers after agreeing to buy
Ignis Asset Management for GBP390 million. Brokerage Panmure Gordon
said the deal should allow Standard Life to benefit from greater
scale as an asset manager and from cost savings.
Write to Tommy Stubbington at tommy.stubbington@wsj.com and
Clare Connaghan at clare.connaghan@wsj.com