European shares rise on Italy debt reports

European shares rose sharply in early trade on Tuesday, buoyed by reports that Italy has asked China to make “significant” purchases of Italian debt, which might help convince markets the euro zone’s third-biggest economy can manage its debt load.

Wall Street turned positive in late trading on Monday, helped by the reports, which came after European markets had closed.

“It wouldn’t be the first time the market had hoped that China would ride to the rescue,” Jeremy Batstone-Carr, strategist at Charles Stanley, said.

“But the Chinese don’t have a great track record. They participated in the Portugal bonds this year, and they lost money.”

At 0710 GMT, the FTSEurofirst 300 index of top European shares was up 0.8 percent at 898.40 points, after falling 2.7 percent on Monday to its lowest close in more than two years, on intensified worries about the euro zone, including the prospect of Greek defaulting, and with Italian bond yields surging.

Stocks rose across the board, including the heavyweight banking sector, a major loser on Monday. The STOXX Europe 600 Banking Index rose 1.4 percent, but is down more than 37 percent in 2011. Italy’s UniCredit rose 3.1 percent. Its shareholders are ready to support a rights issue, the Financial Times said on Monday.

Source: Reuters