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 Oil prices rose after strong Chinese fuel demand halted a slide to
2003 lows triggered by the lifting of sanctions on Iran, while
metals prices rose.
Concerns about Chinese authorities' ability to rebalance the slowing
economy have rattled investors this year after a plunge in stock
markets and the yuan currency raised concerns growth may be slowing
more rapidly than previously thought.
China's economy grew 6.9 percent last year, and 6.8 percent
year-on-year in the fourth quarter, down from 6.9 percent in the
third and the weakest pace since the first quarter of 2009, data
showed.
Quarter-on-quarter, growth slipped to 1.6 percent in the last three
months of 2015 from 1.8 percent in the third.
In a harbinger of slower growth to come, retail sales, industrial
output and fixed-asset investment last month all came in below the
expectations of analysts polled by Reuters.
Mining company shares led European shares higher after metals prices
rose following the Chinese data.
The pan-European FTSEurofirst 300 index rose 2 percent, rebounding
from a 13-month low hit on Monday. The STOXX Europe 600 Basic
Resources index, which includes miners, added 5.5 percent. Britain's
FTSE 100 index rose 1.9 percent, with Anglo American up 11 percent
and Glencore adding 10.5 percent.
"As figures weaken in absolute terms, we can potentially see
additional stimulus measures. That is helping investors' appetite
for risk," said Philippe Gijsels, head of research at BNP Paribas
Fortis Global Markets.
Wall Street looked set to open higher, with e-mini index futures up
1.6 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.7
percent, bouncing off a four-year low touched earlier.
Chinese shares rose on strengthened expectations of more stimulus.
The CSI 300 index of the largest listed companies in Shanghai and
Shenzhen closed up 3.0 percent while the Shanghai Composite gained
3.2 percent, after hitting a 13-month low on Monday.
Tommy Xie, economist at OCBC Bank in Singapore, said he expected
more stimulus from the Chinese central bank, but that the stability
of the yuan, also known as the renminbi, was critical to maintaining
growth.
"If the renminbi continues to weaken, the volatility and capital
outflows get worse, then that is likely to pose a challenge to
growth."
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The yuan traded at 6.5785 to the dollar in onshore markets, little
changed from the previous close.
The International Monetary Fund cut its global growth forecast for
the third time in less than a year, to 3.4 percent in 2016 from 3.6
percent previously, citing a sharp slowdown in Chinese trade and
weak commodity prices.
The dollar gained against the safe-haven Japanese yen in
anticipation of further action by Beijing, possibly as soon as next
month.
The U.S. currency gained 0.6 percent 117.97 yen while the euro fell
0.2 percent to $1.0872. The Australian dollar, whose fortunes are
closely linked to China, a major market for Australia, rose 1.1
percent to $0.6935.
LOW-RISK
The rise in stock markets nudged yields on low-risk German
government bonds higher. Ten-year yields rose 1.7 basis points to
0.49 percent.
Oil prices took heart from data showing Chinese fuel demand last
year rose compared with 2014, up 2.5 percent to 10.32 million
barrels a day.
Brent crude, the global benchmark, rose $1.30 a barrel to $29.81. It
hit lows not seen since 2003 on Monday on the prospect of Iranian
output swelling a global glut.
Copper, of which China is the major consumer, rose 1.3 percent to
$4,434 a tonne, having earlier hit a one-week high at $4,476 a tonne.
Nickel prices also rose.
Gold held broadly steady at $1,087 an ounce.
(Additional reporting by Shinichi Saoshiro in Tokyo and Atul Prakash
in London; Editing by Catherine Evans)
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