LONDON: European stock markets extended gains Tuesday after a largely positive showing across Asia and as oil prices rebounded from 18-year lows, with a jump in Chinese factory activity providing a surprise boost for the virus-hit global economy.
Around midday, Europe’s main stock markets were up more than one% on average.
The dollar was higher, while the euro came under pressure from data showing inflation in the eurozone fell in March on a slump in energy prices caused by the coronavirus outbreak.
“China provided Western investors with a light at the end of the tunnel,” said Connor Campbell, analyst at Spreadex trading group.
China’s manufacturing sector saw surprise growth in March, having been mauled in February as the country went into lockdown to tackle the virus.
China’s Purchasing Managers’Index, a key gauge of factory activity, jumped to 52.0 from a record low 35.7 the month before. Anything above 50 is considered growth. China is slowly returning to a semblance of normal life after months of tough restrictions which locked up millions of people at home and brought economic activity to a near standstill.
“Chinese factory data overnight gave a flicker of hope that the world’s second largest economy is firing back up, despite large parts of the world grinding to a halt,” said City Index analyst Fiona Cincotta.
However the World Bank has warned that fallout from the coronavirus pandemic could bring China’s growth to a standstill, with even a best-case scenario seeing expansion slow to 2.3 % this year from 6.1% in 2019.
Trillions of dollars pledged to offset the economic impact of the deadly virus have provided a semblance of stability to world markets, which were initially pummelled by the rapid spread of the disease, which has forced swathes of the planet — and the economy — into lockdown.