European shares swung higher on Wednesday, partially rebounding from multiyear lows, with companies exposed to China performing particularly well after economic data raised hopes for a recovery in activity in that country.
The pan-European Dow Jones Stoxx 600 index (ST:SXXP: news , chart , profile ) climbed 2.5% to 165.37 on Wednesday, taking back some of the nearly 7% losses made in the first two trading sessions of the week.National equity markets were also higher, with the U.K. FTSE 100 index (UK:UKX: news , chart , profile ) up 2.4% at 3,596.92, the German DAX 30 index (DX:1876534: news , chart , profile ) up 3.3% at 3,810.74 and the French CAC-40 index (FR:1804546: news , chart , profile ) up 2.8% at 2,624.52.
U.S. stocks also rebounded a bit in early trading on Wednesday.
Shanghai's share index rallied amid expectations the Chinese government would expand its economic stimulus package and official data fueled speculation of a recovery in economic activity. Read more on Asian equity markets.
"Markets were hopelessly oversold," noted Heino Ruland, strategist at consultancy FrankfurtFinanz. "In addition to that we have the good news from China," he noted.
Resource stocks up
Investors in Europe were buying into the mineral extractors on Wednesday, a sector that in the past has been fueled by China demand.
Rio Tinto shares climbed 9.4%, BHP Billiton advanced 9.1% and Anglo American 9.6%
"Today's China PMI backs up our view that Chinese GDP growth is more resilient than growth in the rest of the world and that China has to lead the global economy out of recession," said strategists at Credit Suisse.
The strategists said that they recommend playing the relative resilience of Chinese GDP growth via steel and consumer plays in Europe.
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