LONDON: European equities staged a relief rally Tuesday, one day after tanking on fears over the Covid outbreak in China and rising interest rates in the United States.

London’s benchmark FTSE 100 index rose 0.9 per cent overall in late morning deals, though HSBC bank shares slid 3.6pc on news of falling first-quarter profits.

In midday eurozone deals, Frankfurt won 1.2 percent and Paris gained 1.0pc.

Global investor sentiment also won a shot in the arm from Elon Musk’s vast $44-billion (41-billion-euro) agreed purchase of Twitter.

The European single currency hit a two-year low against the dollar, which was boosted by its haven status amid Ukraine turmoil.

World oil prices nudged lower to extend recent losses on stubborn fears over weaker Chinese demand.

“European markets are enjoying a modest relief rally... after Monday’s sharp sell-off, lifted by some positive momentum into the US close last night,” said Victoria Scholar, investment head at Interactive Investor.

Asian indices diverged as investors scrambled to recover from Monday’s global rout, but fears lingered over China’s Covid lockdowns and the US Federal Reserve’s rate-hiking plan.

The Omicron flare-up across China has led authorities to impose strict containment measures in its biggest cities, shutting off millions of people and threatening to deal a hammer blow to the world’s number two economy.

Hong Kong stocks edged up but made only a small dent in the massive losses suffered the day before, while Shanghai extended the previous day’s losses of more than five percent.

Sentiment was soothed somewhat after the People’s Bank of China vowed to boost growth and consumption.

China’s Covid measures have dealt a severe blow to its economy, leading to concerns about knock-on effects for the rest of the world — given its reliance on Chinese-made goods.

The China crisis comes as traders grapple with a hawkish Fed, which is struggling to control inflation that sits at a more than 40-year high.

Published in Dawn, April 27th, 2022