FTSE 100 rises as European stocks make gains

European stocks rose, following a sell off that wiped our two days of gains. The Stoxx Europe 600 Index advanced 0.4 per cent to 354.42 in afternoon trading in London, after earlier rising as much as 1.2 per cent.

Shares extended a weekly loss on Friday as mixed US jobs data stoked concern about an impending Federal Reserve rate increase and the strength of the global economy.

The volume of shares changing hands today was 36 per cent lower than the daily average. A measure of European-stock volatility posted moves exceeding 10 per cent in three of the past four sessions before rising 1.6 per cent today. US markets are closed for a holiday.

“Nothing has fundamentally changed in Europe so this is really all about sentiment,” said Daniel Murray, London-based head of research at EFG Asset Management. “Markets go down one day and up the next – volatility is something investors have to get used to now. Worries about growth in China are going to be less important as the focus moves towards the Fed for the next 10 days. You can make strong arguments either way about whether or not they will hike.”

In China, the governor of the country’s central bank forecast a return to stability for markets. The world’s second- largest economy is seeking to bolster confidence after concerns over growth spurred the biggest monthly drop in global equities since 2012 in August. Data showing German industrial production increased in July also added to investor optimism today.

- Bloomberg