London - European equities bounced back on Tuesday from sharp declines in the previous two sessions as energy stocks tracked higher crude oil prices and steel makers gained following a European Commission move on Chinese and Russian steel imports. The market was also supported by a rally in some French firms, but German chipmaker Dialog Semiconductor slumped 6 percent, dragging down peers such as ARM, after Dialog slashed its revenue guidance. The STOXX Europe 600 Oil and Gas index rose 3.4 percent, the top sectoral gainer in Europe, after oil rose following its lowest in nearly 11 years. BP, BG Group and Royal Dutch Shell rose 2 to 3.5 percent. “A short-term reversal of the decline in oil prices that began on Monday and continued through Tuesday has relieved the pressure on stock markets,” Jasper Lawler, analyst at CMC Markets, said. “There is significant market risk going into the Federal Reserve meeting on Wednesday ... The prospect of rising interest rates adds to tetchiness amongst investors.”
Although the Fed is expected to raise U.S. rates on Wednesday for the first time in nearly a decade, euro zone rates are expected to stay at record lows. Low euro zone borrowing costs are one reason why European stocks are expected to rise in 2016, according to a Reuters poll published this week. The pan-European FTSEurofirst 300 index, which fell to its lowest level in 2-1/2 months on Monday due to a slump in oil prices, rose 2.2 percent by 1354 GMT, while the euro zone’s blue-chip Euro STOXX 50 index advanced 2.4 percent. Miners were broadly higher in line with a rally in European stocks, with the sector getting a further boost from a European Commission step to register Chinese and Russian steel imports. The commission told customs authorities to register imports of cold-rolled flat steel from Dec. 13.
This means duties would apply for incoming product from then if the commission concludes that flat steel is being sold at unfairly low prices. Shares in ArcelorMittal, Glencore and BHP Billiton rose up 2 to 3.6 percent. The French CAC-40 equity index was up 2.3 percent. The Paris market was helped by pharmaceuticals group Sanofi , which climbed 4.5 percent after it said it would swap some assets with Boehringer Ingelheim. There was also an 7.3 percent surge in car parts company Faurecia after it agreed to sell a division to Plastic Omnium. The rise helped to lift the European autos sector , which was also boosted by a rise in European car sales. Rupert Baker, European equity sales executive at Mirabaud Securities, said corporate takeover activity would continue to support European stock markets. “The mergers and acquisitions space will remain busy while rates in Europe remain low,” said Baker.