Investing.com - European stocks rallied on Tuesday, as they recovered from the previous session's sharp losses caused by a broad sell-off in Chinese equities.
During European morning trade, the EURO STOXX 50 rallied 1.97%, France’s CAC 40 jumped 1.82%, while Germany’s DAX 30 surged 2.05%.
European equities plunged on Monday in eaction to a more than 8% drop in Chinese equities, erasing all of the year’s gains.
The decline came as Beijing held off from implementing fresh measures to support equities after markets fell 11% last week. The steep declines in Chinese equity markets undermined investor confidence in the government’s ability to revitalize economic growth.
Financial markets have been roiled since China devalued the yuan on August 11, sparking fears that the economy may be slowing at a faster than expected rate.
Financial stocks were mostly higher, as French lenders BNP Paribas (PARIS:BNPP) and Societe Generale (PARIS:SOGN) jumped 1.93% and 1.40%, although Germany's Deutsche Bank (XETRA:DBKGn) and Commerzbank (XETRA:CBKG) declined 0.73% and 1.08%.
Among peripheral lenders, Italy's Unicredit (MILAN:CRDI) and Intesa Sanpaolo (MILAN:ISP) rallied 1.42% and 1.99% respectively, while Spanish banks BBVA (MADRID:BBVA) and Banco Santander (MADRID:SAN) climbed 0.71% and 1.23%.
Elsewhere, Syngenta AG (SIX:SYNN) surged 7.38% amid reports Monsanto (NYSE:MON) Co. has made an increased takeover offer to the Swiss pesticide producer.
In London, commodity-heavy FTSE 100 advanced 1.74%, boosted by sharp gains in the mining sector.
Shares in Rio Tinto (LONDON:RIO) climbed 3.69% and Antofagasta (LONDON:ANTO) jumped 3.89%, while rivals Anglo American (LONDON:AAL) and Bhp Billiton (LONDON:BLT) surged 4.20% and 6.33% respectively.
Earlier Tuesday, Bhp Billiton said its net profit for the year ending June 30 dropped 86% but added that it is confident in the long-term outlook for commodity demand, while Antofagasta said core earnings declined by 49% in the first half of the year.
RSA Insurance Group PLC (LONDON:RSA) added to gains, with shares up 4.90%, after Zurich Insurance Group AG (SIX:ZURN) offered to buy it.
In the financial sector, stocks were also broadly higher. Shares in the Royal Bank of Scotland (LONDON:RBS) rallied 2.11% and HSBC Holdings (LONDON:HSBA) surged 2.52%, while Barclays (LONDON:BARC) and Lloyds Banking (LONDON:LLOY) soared 2.95% and 3.56%.
In the U.S., equity markets pointed to a sharply higher open. The Dow Jones Industrial Average futures pointed to a 2.46% jump, S&P 500 futures signaled a 2.48% rally, while the Nasdaq 100 futures indicated a 2.53% surge.