European shares posted a broad-based rally as China led gains in global equities amid speculation that state support will limit its market turmoil.
All 19 industry groups on the Stoxx Europe 600 Index rose, with carmakers and miners leading the advance. Daimler AG, BMW AG and Volkswagen AG rose at least 2.5 percent. Commerzbank AG increased 6.8 percent after JPMorgan raised the German lender to overweight, similar to buy, from neutral, and added it to its list of top picks among European banks. Amlin Plc soared 33 percent after MS&AD Insurance Group Holdings Inc. agreed to buy the Lloyd’s of London insurer. Rio Tinto Group contributed the most to gains in a gauge of miners, rising 2.6 percent after giving a bullish assessment of China’s steel and copper demand.
The Stoxx Europe 600 Index advanced 1.2 percent to 359 at the close of trading, after earlier rising as much as 2.3 percent. Shares rebounded Monday from the previous week’s decline, with miners leading gains, helped by reassurances from China’s central bank governor that stability would return to markets. Chinese stocks rallied Tuesday for the first time in five days on speculation state-backed funds bought shares after a weak trade report.
Investors are also awaiting next week’s Federal Reserve meeting on interest rates. Traders are pricing in a 28 percent chance that officials will raise borrowing costs at the September gathering, down from almost even odds before China’s currency devaluation Aug. 11.
A report showing the euro-area economy grew more than forecast in the second quarter also buoyed sentiment today.