European stocks rebound an investor speculation

Frankfurt - European stocks advanced, snapping their worst two-day losing streak since 2008, as investors speculated that policy makers may take action to shore up markets after the recent rout.

The Stoxx Europe 600 Index rose 2.3% to 315.81 at the 09:08. European stocks extended losses yesterday amid growing uncertainty surrounding the fallout from Britain’s shock vote to leave the European Union. The FTSE 100 also recovered 2.3% today. The volume of European shares changing hands was twice the 30-day average, while for British equities, it was more than twofold.

EU leaders gather in Brussels today for the start of a two-day European Council summit to discuss Britain’s decision to leave the bloc. Investors will also look to the Federal Reserve’s response after Chair Janet Yellen warned of the damage a Brexit would cause.

Fed Funds futures indicate little chance the US central bank will raise interest rates by February, but an almost 23% likelihood of a cut as soon as September. Prior to the UK’s referendum, there was zero prospect of a reduction and a 52% chance of an increase.

It’s been a wild ride for European equities in the past few weeks, with the Stoxx 600 falling to its lowest level since February before rebounding 7.8% in the five days through last Thursday as volatility surged in the run-up to the vote. The index is now heading for a 9% decline in June, it’s worst monthly performance since August 2011.

Italian lenders led a measure of banks on the Stoxx 600 to a 2.8% gain, after it fell yesterday to its lowest level since November 2011.

Among stocks moving on corporate news, Nestle advanced 2% after naming Ulf Mark Schneider as successor to chief executive officer Paul Bulcke, handing the reins of the world’s biggest food company to an outsider for the first time in nearly a century. Redrow jumped 8.6% after forecasting that full-year profit may beat analysts’ estimates.