European Stocks Recover From Two-Year Low Amid Italy Optimism

(Bloomberg) -- European equities rebounded from a near two-year low as investors returned to the market amid optimism of a compromise over Italy’s budget.

The Stoxx Europe 600 Index added 0.4 percent after closing at the lowest level since December 2016 on Tuesday. Banking, automaker and technology shares led the advance.

The euro and FTSE MIB Index of Italian stocks increased after the newspaper La Stampa reported that Italian Deputy Premier Matteo Salvini may be open to budget revisions. The global equity sell-off intensified on Tuesday as investors worried about renewed trade tensions between the U.S. and China and struggled to find alternatives to stocks. Oil’s plunge yesterday also didn’t help sentiment as traders fled risky assets, but Brent rallied 1.4 percent on Wednesday.

“An end-of-year rally is unlikely at this stage given the renewed trade tensions between the U.S. and China and the political challenges in Europe (Brexit and Italy) and the fact that global GDP growth is slowing,” said Vincent Juvyns, a global market strategist at JPMorgan Asset Management. “This said, a lot of these elements are already incorporated in assets prices which should provide a cushion as we enter 2019.”

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