European stock markets rose Tuesday, boosted by more stimulus measures from major export market China, but concerns over the region’s growth outlook have limited the gains.
At 03:05 ET (07:05 GMT), the DAX index in Germany traded 0.9% higher, the CAC 40 in France rose 1.4% and the FTSE 100 in the U.K. climbed 0.6%.
Chinese stimulus lifts mood European equities have received a largely positive handover from Asia after Chinese officials unveiled a slew of planned measures to spur economic growth, with the People’s Bank set to cut reserve requirements for banks by 50 basis points to unlock more liquidity.
Tuesday’s moves come after the PBOC had on Monday cut a short-term repo rate to further boost liquidity.
The moves are aimed squarely at shoring up economic growth, as the Chinese economy struggles with persistent disinflation and an extended property market downturn.
China is a major export market for a number of Europe’s senior companies, who have struggled given the downturn in demand as Chinese consumers have curbed spending.
Eurozone growth concerns remain However, worries about the growth outlook for the eurozone remain.
Data released on Monday showed that regional business activity contracted sharply and unexpectedly this month, with the bloc's downturn in manufacturing accelerating.
The slump appeared broad-based with Germany, Europe's largest economy, seeing its decline deepen while France - the second biggest - returning to contraction.
The German Ifo business climate index is due later in the session, and is also expected to show a deterioration in sentiment.
The European Central Bank cut its key interest rates by 25 basis points earlier this month, after a similar move in June, and this slowdown could raise bets on further policy easing in October.
Commerbank in play In the corporate sector, the focus will remain on Commerzbank (ETR:CBKG) after the news that UniCredit SpA (ETR:CRIG) has been using derivatives to more than double its potential stake in the German lender before obtaining regulatory clearance for an actual holding of more than 9.9%.
German Chancellor Olaf Scholz criticized the move as "an unfriendly attack", and the German state still owns 12% of Commerzbank.
UniCredit is seeking ECB approval to increase its Commerzbank holding to just below the 30% which triggers a mandatory takeover under German corporate laws.
Chinese stimulus boosts crude Crude prices rose strongly Tuesday, boosted by the fresh monetary stimulus from top importer China as well as escalating tensions in the Middle East.
By 03:05 ET, the Brent contract climbed 1.1% to $74.03 per barrel, while U.S. crude futures (WTI) traded 1.3% higher at $71.25 per barrel.
China's central bank announced broad monetary stimulus earlier Tuesday, boosting hopes of increased demand for crude from the world’s largest importer as economic activity increases.
Meanwhile, Israel's military said it launched airstrikes against Hezbollah sites in Lebanon on Monday, raising concerns of a disruption to supplies from this oil-rich region, tightening global markets.
