By Clare Connaghan
European stocks rose Tuesday, largely recovering the losses
suffered at the start of the week as hopes of more stimulus
measures from China offset data showing German business confidence
weakened in March.
The benchmark Stoxx Europe 600 index was up almost 0.9%, after
closing down 1.1% Monday. Similarly the U.K.'s FTSE 100 added 1%
after ending down 0.6% in the previous session and Germany's DAX
rose 1.2% following a decline of 1.7% Monday.
Tuesday's healthy gains are boosting U.S. stock futures, which
are indicating a positive opening Tuesday. Around three and half
hours before the start of U.S. trading, futures contracts indicated
a 0.2% 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.
"Expectations of growth-stimulating measures in China are
clearly rising, though there have been no official statements to
support these expectations," said Adam Cole, head of G-10
foreign-exchange strategy at RBC.
The preliminary HSBC China Manufacturing Purchasing Managers'
Index released Monday showed activity fell in March to an
eight-month low of 48.1. The release is the latest evidence of a
slowdown in the world's second-largest economy, raising prospects
that the government could announce stimulus measures.
"The market has shifted focus away from growth concerns and
toward possible policy steps by Chinese authorities to stem the
economic weakness," said analysts at Barclays.
In the foreign-exchange market, the Australian dollar is
benefiting from hopes of stimulus measures from China, as the
currency hit a fresh 2014 high against the buck earlier Tuesday of
$0.9158.
Meanwhile, the Chinese yuan climbed for a third day, rebounding
from a two-month tumble, as the central bank loosens its grip on
the tightly controlled currency and allows more market-driven
moves.
The yuan reached its strongest point in a week Tuesday, at
6.1732 to the dollar, up 0.8% since Friday.
Elsewhere, sterling was almost 0.3% higher against the dollar
after data showed annual consumer price inflation fell in February
to 1.7%, its lowest rate since October 2009. Most recently the
pound was trading at $1.6510, up from $1.6467 late Monday in New
York.
In other news, a closely watched indicator showed German
business confidence weakened in March in response to Russia's
takeover of the Crimean peninsula and signs of a slowdown in some
large developing economies.
The Ifo indicator of business confidence came in at 110.7 in
March, down from 111.3 in February. The release had little impact
on stock markets, but undermined the euro slightly, which most
recently traded at $1.3817.
Russian financial markets shrugged off news that leaders of the
world's largest economies had agreed to effectively remove the
country from the Group of Eight nations in response to Moscow's
military intervention in Ukraine.
The benchmark Micex stock index is up over 1% Tuesday, while the
ruble has rallied to a one-month high against the dollar of
35.59.
The ruble is "benefiting from substantial seasonal tax
payments," emerging market strategists at Commerzbank said in a
note to clients.
In commodities, gold was up 0.5% at $1,315.70 a troy ounce,
while Brent crude was up almost 0.3% at $107.10 a barrel.
Looking ahead, U.S. consumer confidence for March will be
released at 1400 GMT.
Write to Clare Connaghan at clare.connaghan@wsj.com