LONDON, June 26 (Reuters): European shares were on track for their
biggest two-day gain since April on Wednesday, after a month-long
downward trend, thanks to robust US data.
US durable goods orders, new home sales and consumer confidence all came in better than expected on Tuesday, offering some reassurance that the world's biggest economy may be strong enough to cope if the Federal Reserve scales back its stimulus programme in coming months as planned.
There was also some reassurance from China, where a central bank pledge to prevent any lasting credit crunch helped calm financial markets.
That helped the FTSEurofirst 300 index gain 1.6 per cent to 1,148.56 points by 1002 GMT, adding to the previous day's 1.2 per cent rise and trimming its fall from May's 5-year peak to less than 9 per cent.
"The move down was about a very complacent market in terms of risk metrics ... We have been chasing our tails in terms of bringing risk levels to normalisation, and I think that has now occurred," said Steen Jakobsen, CIO at Saxo Bank.
"I am myself personally long the market and risk for the first time in two months based on underlying data in Europe and the US improving combined with the fact that we had a clean out. I think after this sell-off we are in for a correction back up over the next month or two."
The move higher helped European indexes rise above some technical resistance levels, with EuroSTOXX 50 breaking above the 23.6 per cent Fibonacci retracement of the past month's fall to trade 2 per cent higher at 2,594.90 points.
However, technical analysts remained cautious about the market, with the EuroSTOXX 50 chart still showing a downside gap between 2,678.03 and 2,651.81 points, which opened up last week.
US durable goods orders, new home sales and consumer confidence all came in better than expected on Tuesday, offering some reassurance that the world's biggest economy may be strong enough to cope if the Federal Reserve scales back its stimulus programme in coming months as planned.
There was also some reassurance from China, where a central bank pledge to prevent any lasting credit crunch helped calm financial markets.
That helped the FTSEurofirst 300 index gain 1.6 per cent to 1,148.56 points by 1002 GMT, adding to the previous day's 1.2 per cent rise and trimming its fall from May's 5-year peak to less than 9 per cent.
"The move down was about a very complacent market in terms of risk metrics ... We have been chasing our tails in terms of bringing risk levels to normalisation, and I think that has now occurred," said Steen Jakobsen, CIO at Saxo Bank.
"I am myself personally long the market and risk for the first time in two months based on underlying data in Europe and the US improving combined with the fact that we had a clean out. I think after this sell-off we are in for a correction back up over the next month or two."
The move higher helped European indexes rise above some technical resistance levels, with EuroSTOXX 50 breaking above the 23.6 per cent Fibonacci retracement of the past month's fall to trade 2 per cent higher at 2,594.90 points.
However, technical analysts remained cautious about the market, with the EuroSTOXX 50 chart still showing a downside gap between 2,678.03 and 2,651.81 points, which opened up last week.
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