By Danilo Masoni
MILAN, Jan 26 : European shares steadied by midday on Tuesday, recovering after sharp losses earlier in the session, as crude oil prices bounced back above $30 on hopes of deal to tackle a global supply glut.
The STOXX Europe 600 Oil and Gas index was up more than 1 percent after falling earlier, after oil prices rose on expectations that OPEC and non-OPEC producers may be edging closer to a deal.
The Organization of the Petroleum Exporting Countries is making renewed calls for rival producers to cut supply alongside its members.
“Indices once again tracking the moves in oil. It’s been another volatile session for oil, with both WTI and Brent crude trading back below $30 earlier only to recover to trade higher,” OANDA analyst Craig Erlam said.
“Despite the rally towards the back end of last week, there is clearly still a desire to push prices back to their lows and it will be interesting to see how successful they are today.” By 1212 GMT, the pan-European FTSEurofirst 300 was flat in percentage terms at 1,324.21 after falling to a low of 1,296.66 earlier in the day and dropping 0.7 percent on Monday.
The index is down about 9 percent since the start of the year.
Global stocks have had a rocky start to 2016 due to concerns over slowing growth in China and plunging crude prices, and with investors struggling to find safe haven investments.
There was a brief reversal in the selloff last week when European Central Bank chief Mario Draghi hinted at more stimulus, but worries have resurfaced over the central bank’s ability to prop up the economy.
“There is massive doubt if any ECB action will be able not only to boost growth but also fight disinflation with both a slowing economy in China and lower oil prices likely to lead inflation even lower,” City of London trader Markus Huber said.
Among the gainers, shares in Siemens rose 7.8 percent after Europe’s biggest industrial group raised its full-year earnings forecast on strong first-quarter results.
“We were most surprised by the strength in Healthcare with 8 percent order and 11 percent organic sales growth, while the slowdown in the short-cycle Digital Factory impacted margins as expected,” wrote Barclays, which rates Siemens “underweight”.
Philips stood out with a gain of 6.5 percent after the Dutch maker of LED lights and medical scanners on Tuesday reported core fourth-quarter earnings that beat expectations but issued a cautious outlook for 2016.
Barclays said the results were the best ones in a long time, but the outlook was “rather subdued”.