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 The rebound in Europe looked set to extend to the United States.
Futures markets pointed to a rise of more than 0.5 percent on Wall
Street.
Britain published the first snapshot of second quarter economic
activity of any G7 country earlier on Tuesday, reporting gross
domestic product grew 0.7 percent, up from 0.4 percent in the first
quarter.
The U.S. Federal Reserve begins its two-day policy meeting later. No
change in interest rates is expected, so attention will focus on
whether Fed chair Janet Yellen signals September or December as the
most likely date for a rate increase.
"For me, China is a short blip rather than a real slowdown. What we
are hearing from company management is pretty buoyant, even if we
see the dramatic impact on stock prices and on the wealth effect,"
said Ingo Speich, portfolio manager at Union Investment in
Frankfurt.
"The earnings outlook in the euro zone is rising compared to the
U.S. and companies are reporting pretty decent numbers," he said.
At 1100 GMT, the FTSEuroFirst 300 index of leading European shares
was up 1.2 percent at 1,548 points <.FTEU3>.
Germany's DAX <.GDAXI> was up 1.4 percent at 11,211 points, France's
CAC 40 <.FCHI> up 1.2 percent at 4,988 points and Britain's FTSE 100
<.FTSE> up 1 percent at 6,563 points.
Shares in Kering <PRTP.PA> surged 6.6 percent after Gucci, the
flagship brand of the French luxury and sportswear group, posted a
4.6 percent rise in underlying second-quarter sales.
And RSA Insurance Group <RSA.L> jumped 11 percent after Zurich
Insurance <ZURN.VX> said it was considering a bid for the British
group, which has a market capitalization of 4.4 billion pounds ($6.9
billion).
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> ended the day 0.2 percent higher after falling
nearly 1 percent early on, touching its lowest level since July 9.
Tokyo's Nikkei <.N225> ended 0.1 percent lower.
The main China indexes fell again, although by nowhere near as much
as Monday's 8.5 percent plunge. The Shanghai market benchmark <.SSEC>
closed 1.7 percent lower.
After hitting a peak in early June, China's main indexes dropped by
a third in less than a month, rebounded by a quarter, then saw their
biggest one-day decline since 2007 on Monday.
Authorities in Beijing said they would redouble their efforts to
shore up the market, something that could help soothe nerves in
Western markets as well.
DOMESTIC FOCUS
Oil remained under pressure. Brent crude futures hit a new six-month
low after Monday's Chinese stock market crash bred worries the
world's biggest energy consumer may cut back demand, leading to a
global supply glut. [O/R]
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Brent fell as much as 2 percent to $52.28 <LCOc1>, a level not seen
since February 2. U.S. crude <CLc1> was down 1 percent just below
$47 a barrel, its lowest since late March.
The price of copper <CMCU3>, heavily influenced by demand from key
consumer China, recovered from Monday's six-year low and was up 1
percent at $5,245 a tonne on the London Metal Exchange.
The broader Thomson Reuters CRB commodities index <.TRJCRB> also hit
a six-year low overnight.
In currency markets, the dollar rose against many of its key rivals,
including the euro and yen, as traders bet that the first U.S. rate
hike in almost a decade is still likely to come in September.
"Undoubtedly the Fed has had its eye on China – and the other on
Greece – when it comes to watching overseas developments," said
Steve Barrow, head of G10 strategy at Standard Bank.
"There's been some concern that either could blow away any thoughts
of lift-off this year, but we very much doubt it. We think the Fed
will stay focused on the domestic economy and will start to lift
rates in September."
The euro was down 0.5 percent at $1.1035 <EUR=>, almost a full cent
down from Monday's two-week high of $1.1129, and the dollar was up
almost 0.5 percent against the yen at 123.75 yen <JPY=>.
Investors will also be looking to U.S. earnings on Tuesday and
economic data releases, including Markit PMIs for July and
CaseShiller house prices for May.
Bond yields edged higher, with the 10-year U.S. Treasuries yield up
2 basis points at 2.25 percent <US10YT=RR> and UK and German yields
up around 1 basis point.
(Reporting by Jamie McGeever; Additional reporting by Lionel
Laurent; Editing by Larry King; To read Reuters Global Investing
Blog click on http://blogs.reuters.com/globalinvesting; for the
MacroScope Blog click on http://blogs.reuters.com/macroscope; for
Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)
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