Europe: Stocks gain with metals after Chinese shares inch higher

[WELLINGTON] European stocks gained with metals while Chinese shares eked out gains amid government efforts to prop up the country's sputtering stock market.

The Stoxx Europe 600 Index climbed 1.1 per cent after China's CSI 300 Index closed 0.3 per cent higher. Copper in London rebounded and gold gained a second day. Futures on the S&P 500 advanced 0.1 per cent after the index's sixth-worst start to a year in data compiled by Bloomberg going back to 1927.

"There's more easing ahead from the Chinese," said Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which oversees about US$115 billion. "I expect them to cut interest rates and or the reserve-requirement ratio again. We've been reminded that volatility in financial markets remains high and that the global economy still needs monetary policy support."

China moved to support its stock market as state-controlled funds bought equities and regulators signaled a selling ban on major investors will remain beyond this week's expiration date, according to people familiar with the matter. A 7 per cent slump in mainland China shares on Monday triggered a trading halt, and the rout spread throughout Asia, Europe and the US.

The Stoxx Europe 600 Index rebounded from its biggest drop in a month to trade at 360.40 at 8:07 am in London. The CSI 300 Index ended the day higher after rising as much as 1.4 per cent and falling 2.7 per cent. The MSCI Asia Pacific Index slid 0.4 per cent. Australia's S&P/ASX 200 Index lost 1.6 per cent, and New Zealand's S&P/NZX 50 Index slipped 0.7 per cent in Wellington's first day of trading for the year.

The MSCI All-Country World Index rose 0.2 after tumbling 2.1 per cent Monday, exceeding its slide of 1.5 per cent on the first day of 2001. South Korea's Kospi index gained 0.6 per cent following the last session's 2.2 per cent slide. Malaysian and Indonesian shares also climbed. Commodities Copper rose 1.5 per cent to US$4,678.50 a metric ton on the London Metal Exchange, while nickel, aluminum, and zinc also each increased more than 1 per cent as industrial metals pared the biggest decline since September. The LME Index of six base metals sank the most since Sept 22 on Monday after data showed weaker factory activity in both China and the US, the world's two biggest metals consumers.

Gold advanced 0.2 per cent to US$1,076.92 an ounce, gaining for a second day.

West Texas Intermediate for February delivery fell 0.1 per cent to $36.73 a barrel on the New York Mercantile Exchange, extending Monday's 0.8 per cent decline. US crude inventories are forecast to remain unchanged, keeping supplies more than 130 million barrels above the five-year seasonal average, according to a Bloomberg survey before government data Wednesday.

The Australian dollar gained 0.3 per cent while the New Zealand currency dropped 0.2 per cent. The euro dropped 0.2 per cent against the US dollar while the yen traded near the highest in more than two months.

Indonesia's rupiah climbed 0.7 per cent, gaining for the first time in six days, as the government's latest fuel-price cuts spurred optimism that consumer spending will increase and help the economy.

BLOOMBERG