LCG London Cap

By Riva Gold 

Global stocks rallied on the first day of the new quarter as concerns over China's slowing growth eased and a strong close on Wall Street spurred gains overseas.

The Stoxx Europe 600 was up 1.1% in early trade, one day after finishing its worst quarter since 2011.

Sentiment was boosted on Thursday after new data showed modest signs of improvement in China's manufacturing sector.

China's official manufacturing purchasing managers index ticked up slightly last month, beating expectations. The official manufacturing purchasing managers index inched up to 49.8 in September from 49.7 in August, according to the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics. Still, a PMI reading below 50 points to a contraction.

A competing private gauge of nationwide manufacturing activity, the Caixin China manufacturing PMI, was down slightly at 47.2 in September, a six-year low, compared with 47.3 in August.

Asian markets, which had already opened higher, extended gains after the data was released. Australia's S&P/ASX 200 was 1.7% higher.

"There has been a growing feeling in the markets that while the global outlook has dimmed somewhat, the current virulence of the selloff was somewhat overdone," said Angus Nicholson, Market Analyst at IG.

Japan's benchmark Nikkei Stock Average climbed 1.9%. Investors in Japan also considered the Bank of Japan's latest corporate survey, which showed that big manufacturers were more cautious about the economy in the third quarter as exporters were pressured by China's slowdown.

Markets in China and Hong Kong were closed for national holidays.

Meanwhile, investors Thursday were also looking ahead to Friday's U.S. nonfarm payrolls report, which is closely watched by Federal Reserve officials as they decide when to raise short-term interest rates. Economists expect 200,000 jobs were created in September and estimate that the unemployment rate held at 5.1%.

U.S. stocks rose on Wednesday, with the Dow Jones Industrial Average adding 1.5%. The S&P 500 gained 1.9% and the Nasdaq Composite rose 2.3%.

Still, all three major U.S. indexes posted their biggest quarterly losses in four years. For the quarter, the S&P 500 fell 6.9%, the Dow industrials dropped 7.6% and the Nasdaq Composite Index declined 7.4%.

In commodity markets, Brent crude oil was up 0.9% at $49.50 a barrel. Gold was down 0.3% at $1111.90 an ounce.

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

(END) Dow Jones Newswires

October 01, 2015 03:59 ET (07:59 GMT)

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