Europe close: Stocks stage bounce even as investors seek out safe havens
Stocks across the Continent finished mostly higher on Wednesday, playing catch-up with shares on Wall Street following the previous session's drubbing, helped by a report suggesting that the next round of US-China trade talks scheduled for September would likely still go ahead.
Late in the session, the South China Morning Post cited former Chinese vice-minister of Commerce, Wei Jianguo, as saying that trade talks planned for September, in Washington DC, were likely to still go ahead - although prospects for a deal were "dim".
Nevertheless, technical analysts were quick to point out how the slight in bounce share prices prices came on the back of a nearly 9% drop in the likes of the German Dax from its most recent highs, with that caution clearly reflected in government debt markets, as investors continued to rush toward the relative safety of government bonds.
"Haven assets are surging higher today, as investors head out of risk assets once more. Gold has been one of the big beneficiaries from recent turmoil, and today’s stock slide provides yet another reason to buy gold," said IG's Josh Mahony.
"The Yuan is on the slide once again today, and with the government restricting FX outflows, gold is one area of safety the Chinese can head to in a bid to avert wealth erosion."
By the end of trading, the German Dax had bounced 0.71% to 11,650.15, having recovered from a brief dip into negative territory, while the French Cac-40 rose by 0.61% to 5,266.51.
In parallel, the yield on the benchmark 10-year German bund was off by five basis points to -0.58%, having earlier fallen to a fresh record low of -0.61%, after central banks in India, Thailand and new Zealand all surprised with larger than expected interest rate cuts overnight.
Gold was also bid higher, with the December contract on COMEX jumping 2.07% to $1,514.90/oz..
At the sector level, Oil&Gas and lenders' shares were a drag, with their corresponding sector gauges in the benchmark Stoxx 600 ending the session lower by 0.98% and 0.77%, respectively.
The drop in the former came on the heels of a 4.49% drop in front month Brent crude oil futures to $56.41 a barrel on ICE.
There was little to cheer about in the economic data released on Wednesday.
According to Germany's Ministry of Finance, industrial production shrank at a 1.5% month-on-month clip (consensus: -0.6%) in June, weighed down by drops in the output of intermediate and capital goods.
Over in France meanwhile, the Ministry of Economics reported a widening in the country's deficit on foreign trade, from -€3.3bn for May to -€5.2bn in June.