Stocks rise on steady oil, China hopes

18/02/2016 06:09 AST

European stock markets and Wall Street kicked higher on Wednesday, aided by higher oil prices and hopes of new Chinese economic stimulus measures, dealers said.

But enthusiasm was capped by uncertainty about a possible deal between major oil producers, and also about central bank policy as investors awaited the minutes of the Federal Reserve’s January meeting later Wednesday for guidance.

Frankfurt, London and Paris were all up by more than two per cent in mid-afternoon, extending earlier gains as the New York market strengthened in early dealings. Briefing.com analyst Patrick O’Hare called Wall Street gains “sentiment driven”, saying they appeared to be based on an assumption Iran would limit its oil output in cooperation with other major producers.

Earlier, Asia indices hit reverse after a recent rally, with energy firms down after an oil output freeze deal by top producers Saudi Arabia and Russia left investors disappointed.

Shanghai shares however rallied more than one per cent, adding to the previous day’s surge, on hopes for fresh stimulus from China’s leadership.

And world oil prices firmed as Iran’s oil minister started talks on Wednesday with his Iraqi, Venezuelan and Qatari counterparts as investors watched whether Tehran would follow Saudi Arabia and Russia’s pact to freeze output. “Stable oil prices and rhetoric from the Chinese government promising measures to boost China’s flagging economy has prompted a modest recovery in European markets on Wednesday,” said analyst Jasper Lawler at trading firm CMC Markets.

The mining sector forged ahead on the brighter outlook for commodity demand from key consumer and Asian powerhouse economy China.

London’s top gainer was Swiss mining giant Glencore’s stock, buoyed after the company announced the early refinancing of its $8.45-billion (7.6-billion-euro) revolving credit facility. In Asia an early rally lost steam as profit-takers moved in following some hefty gains on Monday and Tuesday. Tokyo’s Nikkei fell 1.36 after enjoying a more than seven per cent surge in the previous two sessions, with a stronger yen acting as a millstone.

Hong Kong lost one per cent, Sydney ended 0.6 per cent lower and Seoul was 0.2 per cent off. However, Shanghai added more than one per cent - on top of the 3.3 per cent gain Tuesday - on growing hopes for fresh measures to kick-start the world’s number-two economy.

The rally came as reports swirled that China would make more cash available to local authorities to spend on new building projects, which reinforces speculation the government is planning fresh stimulus.

The Gulf Today