European shares recoverComment on this story
London - European equity markets recovered on Wednesday from losses in the previous session as a rebound in Banco Espirito Santo and in mining stocks lifted the region's bourses.
The pan-European FTSEurofirst 300 index, which had slipped back 0.4 percent on Tuesday, was up by 1 percent at 1,372.48 points while the euro zone's blue-chip Euro STOXX 50 index rose 1.2 percent to 3,190.12 points.
Banco Espirito Santo (BES) rose nearly 20 percent to rebound from having fallen to record lows on Tuesday, enabling Lisbon's benchmark PSI-20 index to advance by 2.9 percent.
Traders said that even though BES remained dogged by the fact that a holding company of the bank's founding family had failed to repay a $1 billion loan, some investors were now starting to think the stock represented a relative bargain.
“There must be investors there counting that most of the impact is already priced in and it's time to buy,” said Fincor analyst Albino Oliveira.
Traders added that BES was also benefiting from an extension to a ban on short-selling on its shares - or betting on future falls in a share price - and from expectations among investors that it could raise more capital if necessary.
MINING STOCKS RISE
Mining stocks outperformed after Chinese growth slightly beat expectations, hinting at resilient demand in the world's largest metals consumer.
The STOXX Europe 600 Basic Resources Index - which houses mining companies - rose 1.4 percent, beating a 1.1 percent rise on the broader, pan-European STOXX 600 index .
China, the world's second-largest economy, grew 7.5 percent in April-June from a year earlier, the statistics bureau said on Wednesday, just ahead of a median forecast of 7.4 percent in a Reuters poll.
“It confirms the trend we've seen from improving PMI data, and is in line with the idea of a pick-up in the global economy,” Coutts global equity strategist James Butterfill said.
“There's a close correlation between Chinese industrial production and the mining sector, so this pick-up is encouraging.”
The FTSEurofirst 300 remains up by around 3 percent since the start of 2014, while the Euro STOXX 50 is up around 2 percent. - Reuters