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 The more upbeat tone looked set to spill over into U.S. trade, with
index futures suggesting a positive open on Wall Street, and took
the shine off safer assets such as low-risk government debt and
gold.
Investors and traders awaited Congressional testimony from Federal
Reserve Chair Janet Yellen for clues to the outlook for monetary
policy. Sharp falls in global stocks and weak U.S. economic data
have led markets to slash expectations for the pace and extent of
Fed interest rate rises to follow December's first hike in nearly a
decade.
The pan-European FTSEurofirst 300 index rose 2.2 percent, with
investors cheered by a Financial Times report that Deutsche Bank
was considering buying back several billion euros of its debt.
Germany's flagship lender, whose shares have fallen almost 40
percent this year, rose more than 13 percent. The STOXX Europe 600
banks index was up 5 percent.
"The rebound in Deutsche Bank is helping to reassure some investors
who had been concerned about possible contagion in the banking
sector," said Francois Savary, chief investment officer at
Geneva-based Prime Partners.
Italian banks Intesa Sanpaolo ISP.MI> and UniCredit were both up
more than 11 percent and Germany's Commerzbank added 9
percent.
The FTSEurofirst index has fallen for the last seven trading days
and on Tuesday hit its lowest since September 2013. It was on track
to post its biggest one day percentage gain in 1 1/2 weeks.
The big banks' fortunes are seen as closely linked with the global
growth outlook, which is faltering, while the adoption by several
major central banks of negative interest rates to help lift growth
has hit their business.
Those concerns have spread across the globe and on Wednesday helped
drive Tokyo's Nikkei index to its lowest since 2014. Mitsubishi UFJ
Financial Group fell 7.1 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> fell 0.3 percent. Australian stocks <.AXJO> touched
a 2 1/2-year trough and closed down 1.2 percent.
Oil prices, which fell 8 percent on Tuesday, rose on the prospect of
OPEC and rival producers cooperating to tackle a supply glut that
has sent prices to a 12-year low.[O/R]
Brent crude , the international benchmark, rose 1.7 percent to
$30.82 a barrel.
Rising stocks dulled the appeal of perceived "safe-haven" assets,
among which the yen has shone lately.
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NEXT UP: YELLEN
The dollar languished close to a 3-1/2-month low against a basket of
currencies, as traders waited for U.S. interest rate guidance from
Fed chief Yellen.
The dollar index was flat at 96.143, having touched 95.663 on
Tuesday, its weakest since October.
The yen firmed against the dollar but was below a 15-month high hit
on Tuesday. It last traded at 114.90 yen per dollar. The euro was
down 0.3 percent at $1.1258.
Societe Generale strategist Kit Juckes said Yellen would have a fine
line to walk when she delivers her testimony to Congress, due at
8.30 a.m. ET.
"How do you sound soothing enough about the global market
environment and remain true to what you want -- which is raising
rates if the sun comes back out?," he said.
German 10-year government bond yields, another safe haven, edged up
1.6 basis points to 0.25 percent.
Germany sold almost 4 billion euros of two-year bonds in a sale that
drew strong demand, helped by bets that the ECB may cut rates by
more than 10 basis points in March.
Ten-year Japanese government bonds closed in Tokyo yielding 0.005
percent, having hit a record low of -0.035 percent. The JGB yield
went negative on Tuesday, following the Bank of Japan's introduction
of negative rates on Jan. 31.
Gold, another asset sought in times of trouble, edged down from a
7-1/2- month high as European shares rallied. It was last at
$1,182.61 an ounce.
(Additional reporting by Shinichi Saoshiro in Tokyo, Dhara
Ranasinghe, Marius Zaharia, Jemima Kelly and Sudip Kar-Gupta in
London; Editing by Catherine Evans)
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