European stocks rally after Wall Street rebound

European stock markets rallied Wednesday following strong gains on Wall Street, as investors weighed the reopening of economies versus concerns about the fast-spreading Delta variant of the coronavirus.

Investor confidence — built on months of vaccinations as well as vast government and central bank financial support — has been knocked in recent weeks by surging infections that put the global economic recovery at risk.

Equity markets, which had been sitting at record highs, lost support as dealers shifted into havens such as US bonds, gold and the Japanese yen.

But Wall Street bounced back Tuesday, feeding through into Europe and much of Asia on Wednesday.

“A bumper rebound for US stocks has fed through to Europe,” noted Joshua Mahony, senior market analyst at IG trading group.

At the same time, the Delta variant “will undoubtably grow in importance around the world. Thus there are concerns that those countries without high vaccination levels will be unable to cope without heavy restrictions”, he added.

Official data Wednesday showed UK government borrowing dropped in June with easing lockdown measures boosting the economy.

But economists reckon the cost of borrowing will increase with the prospect of interest rates rising sooner than expected as the reopening of economies pushes up inflation.

England on Monday lifted the bulk of its lockdown measures, while stricter restrictions remain across the rest of the UK.

In commodities trading Wednesday, oil prices rebounded following recent losses on lower demand growth expectations that were stoked by rising infection rates, and a decision to by OPEC and its allied producers to increase production.

“Oil remains very susceptible to intraday swings in risk sentiment and will remain so for the rest of the week,” OANDA’s Jeffrey Halley forecast.

– Key figures around 1115 GMT –

London – FTSE 100: UP 1.7 percent at 6,996.03 points

Frankfurt – DAX 30: UP 0.8 percent at 15,343.42

Paris – CAC 40: UP 1.3 percent at 6,430.90

EURO STOXX 50: UP 1.3 percent at 4,008.94

Tokyo – Nikkei 225: UP 0.6 percent at 27,548.00 (close)

Hong Kong – Hang Seng Index: DOWN 0.1 percent at 27,224.58 (close)

Shanghai – Composite: UP 0.7 percent at 3,562.66 (close)

New York – Dow: UP 1.6 percent at 34,511.99 (close)

Euro/dollar: DOWN at $1.1773 from $1.1780 at 2210 GMT

Pound/dollar: DOWN at $1.3606 from $1.3620

Euro/pound: UP at 86.51 pence from 86.44 pence

Dollar/yen: UP at 110.11 yen from 109.87 yen

Brent North Sea crude: UP 1.6 percent at $70.47 per barrel

West Texas Intermediate: UP 1.6 percent at $68.27 per barrel