Equities turmoil eases on rumors of China action | Business| Economy and finance news from a German perspective | DW | 25.06.2013
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Equities turmoil eases on rumors of China action

A bear run in global equity markets appears to have calmed somewhat as European shares have rebounded and Asian markets were able to pare hefty losses. Nerves cooled down amid rumors China might act on a credit squeeze.

European shares, which had slipped for four consecutive trading days, steadied on Tuesday, with the pan-European FTSEurofirst 300 index gaining almost 1 percent in early trading.

Britain's top share index, the FTSE 100, was up 40 points, or 0.7 percent, while Germany's DAX index also opened 0.7 percent higher after slumping a staggering 6.5 percent since the middle of last week.

The stock market gains in Europe were prompted by a late recovery in Asian shares outside of Japan, which were able to turn around massive losses seen in earlier trading Tuesday.

China's CSI300 of leading A-share listings in Shanghai and Shenzhen ended down just 0.3 percent after it had already been down by 6 percent as the bear run in China had initially seemed to continue.

The Shanghai Composite index slipped 0.2 percent, paring early losses of 5 percent.

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Credit crunch threatens China growth

Traders attributed the recovery to rumors that the Chinese central bank might use a news conference later on Tuesday to address the share market turmoil and the liquidity problems in China's banking sector.

China is pursuing restrictive monetary policy, fearing that a further expansion in credit will fuel bad investments and undermine the country's long-term growth prospects. However, the policy has led to a liquidity squeeze which is threatening short-term growth in the world's second largest economy.

uhe/dr (Reuters, dpa)

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