European stock markets staged a brief recovery this morning as shares in Asia stabilised and mining stocks rallied following a mass sell-off on Monday.
Markets across the globe dropped yesterday after weaker-than-expected economic data from China spooked investors.
European bourses swung in and out of positive territory, with the German DAX flat by 09:30am. The CAC in Paris was down 0.2pc and the Spanish IBEX was up 0.12pc.
Mike McCudden, of Interactive Investor, said: “Equities are enjoying what appears to be a brief respite from the storm this morning, but any argument to push on up from here will not hold much water in the short term.
“Those who put decreasing volatility on their Santa wish list have been left very much disappointed with weak global growth and geopolitical tension continuing to dominate investor sentiment. Indeed, the VIX (which measures volatility in stock prices) is starting to creep higher once again.”
The wobbliness in stock markets comes after the People’s Bank of China injected nearly $20bn into money markets - its largest amount since September.
A six-month selling ban for major institutions was also extended to stem declines in an attempt to avoid a repeat of August’s Black Monday.
Nonetheless, Asian markets were extremely choppy after a stormy start to 2016, as Chinese indices swung from negative to positive territory. The Shanghai Shenzhen CSI300 index closed marginally higher up 0.3pc to 3,478.78.
On Monday, data from China that showed factory activity had contracted for a 10th consecutive month in December triggered a 7pc slump and early closure of local markets. This prompted chaos across global markets.
The FTSE 100 outperformed its peers in early trade, given its heavy weighting towards mining stocks. The beleaguered mining sector rebounded after copper slipped to a two-week low on Monday in the wake of increased fears about demand from the world’s top metals consumer.
Glencore enjoyed a relief rally, up 4pc to 88.7p, while BHP Billiton and Anglo American advanced by around 2pc.
Meanwhile, gold stocks which rallied yesterday as risk-averse investors rushed to safe-haven stocks. Gold miner Randgold Resources continued to tick higher - up 18p to £42.61.
Mike van Dulken, of Accendo Markets, said: “Gold is still attempting to break out beyond two-month falling highs around $1,075 as it benefits from safe-haven demand amid market volatility and geopolitical risk.”
On Wall Street last night, the S&P 500 closed 1.5pc in the red, while the Dow Jones industrial average and the Nasdaq Composite index lost 1.6pc and 2.1pc, respectively.
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