A move from China's Central Bank to kick start its wavering economy was welcomed by investors. Shares, oil and core bond yields all extended gains in midsession European trade on Tuesday. Ciara Lee reports.
It was a dramatic start to the week for investors - but respite came in the form of a rate cut - one year benchmark bank lending was lowered by 25 basis points The Chinese Central Bank also relaxed reserve requirements for the second time in two months - cranking up support for a stuttering economy. European shares, oil and the dollar extended gains after the news, with the FTSEurofirst 300 rising more than 4 percent. Alastair McCraig is from IG. (SOUNDBITE) (English) MARKET COMMENTATOR FROM IG, ALASTAIR MCCAIG, SAYING: "I think the aggressive reaction we have seen in the equities markets have arguably forced the Chinese government's hand here. It's worth remembering that the Chinese investment arena os considerably more juvenile one than its Western counterparts. They've probably learnt some pretty harsh lessons." The pummelling began on Monday - with global markets shedding billions of dollars. But it took another near 8 percent fall in China's equity markets to prompt the new stimulus measures. Concerns still remain about the Chinese slowdown and how it will impact global growth. Jeremy Batstone-Carr from Charles Stanley. (SOUNDBITE) (English) DIRECTOR OF PRIVATE CLIENT RESEARCH AT CHARLEY STANLEY, JEREMY BATSTONE-CARR, SAYING: "With Chinese economic weakness perhaps progressing into other parts of Asia and the emerging economies given the commodity and energy price collapse, the risks are somewhat to the downside." The weakness in China has kept the pressure on commodities. But copper - often considered a barometer for global economic activity - rose after the rate cut. It's hoped the move will increase demand in the world's largest consumer of industrial metals.