MT Arcelor Mittal New

Global stocks rallied Tuesday even though China recorded the weakest annual pace of growth in a quarter century, as gains in crude oil and base metals prices lifted downtrodden energy and mining shares.

China's 6.9% annual growth rate seemed to offer relief to investors, some of whom had feared worse, and many expect Beijing may do more to stimulate its economy.

The Stoxx Europe 600 rose 1.4% in early trade Tuesday after Asian shares closed higher.

Futures pointed to a 1.4% opening gain for the S&P 500 as it reopens from a holiday. Changes in futures don't necessarily reflect market moves after the opening bell.

Fears of a slowdown in China and its impact on commodity prices have rattled stock markets around the world from the first trading session of the year. Both European stocks and the S&P 500 are down 8% in 2016.

Still, some investors are less pessimistic on the outlook for China, noting that Beijing has room to maneuver if it wants to boost its slowing economy.

"China still has a dashboard of policy buttons it can press," said Neil Williams, group chief economist at Hermes Investment Management, noting China can continue to devalue its currency, undertake quantitative easing, or "go on a fiscal splurge" if needed.

The volatile Shanghai Composite Index was up 3.2% Tuesday, bringing losses for the year down to 15%.

Adding to the positive sentiment across markets, Brent crude oil was last up 2.6% at $29.28, as bargain-hunting overshadowed the sting of slowing Chinese growth. Base metals also gained, with copper up 1.8%.

The day's reprieve in battered commodity prices sent Europe's basic resources sector up 4.1%, as the oil and gas sector climbed 2%. Shares in mining Glencore PLC were up 7.7%, as Anglo American PLC gained 7.9% and steelmaker ArcelorMittal SA rose 5.3%.

In currencies, the euro was down 0.1% against the dollar at $1.0878 ahead of inflation data for the eurozone as a whole due later in the European morning.

Data early Tuesday showed German inflation was unchanged in December from the previous month, well below the European Central Bank's medium-term inflation target of just around 2%.

Subdued inflation across the eurozone caused the ECB in December to cut its deposit rate--at which commercial banks park excess money with the central bank--deeper into negative territory, while it also extended the duration of its asset purchase program to March 2017.

The ECB holds a governing council meeting on Thursday, and while analysts don't expect immediate action, many expect the bank to roll out additional stimulus measures later this year.

Elsewhere in Asian trade, Japan's Nikkei Stock Average was up 0.6% as the dollar gained 0.4% against the yen to ¥ 117.8790. Australia's S&P ASX 200 added 0.9%.

Gold was up 0.3% at $1093.90 a troy ounce.

Later Tuesday, the U.S. earnings season continues with reports from Bank of America Corp., Morgan Stanley, International Business Machines Corp. and Netflix Inc.

Emese Bartha contributed to this article

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

January 19, 2016 05:25 ET (10:25 GMT)

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