San Francisco Frontiers - European stocks rebound, China rate cut fails to ease worries

At midday, Paris stocks were up by more than one percent, with both Frankfurt and London also pushing higher.

Market sentiment has taken a hammering this month by a string of weak data out of Beijing indicating the post-Covid recovery has run off track, while there are concerns that the US Federal Reserve could raise interest rates further and keep them elevated for longer as it tries to bring inflation down to its two-percent target.

Focus turns this week to a symposium of top central bankers and business leaders at Jackson Hole, Wyoming, with dealers hoping for some guidance on rates.

"From recent commentaries, it appears that central bankers will keep the flexibility to hike rates further, while clearly avoiding committing to cut rates soon," said Redmond Wong at Saxo.

But Swissquote Bank analyst Ipek Ozkardeskaya said fears of a hawkish Fed have already been largely priced in by the market.

"If there is no more hawkish surprise from this week’s Jackson Hole meeting, tensions among investors could ease by next week, and give markets some breathing room," she added.

Wall Street stocks took a pounding last week as data showing the US economy to be resilient -- which increases pressure on the Fed to raise interest rates further -- while borrowing costs for companies are already rising and yields on risk-free US government bonds rose to 4.3 percent.

While the Fed and others contemplate more increases, the People's Bank of China announced on Monday another cut in a bid to kickstart the sputtering economy.

The decision to lower the one-year loan prime rate, which serves as a benchmark for corporate loans, comes after a reduction in June and leaves it at a historic low.

However, it stood pat on the five-year LPR, which is used to price mortgages and the reductions were smaller than forecasters had predicted.

The announcement did little to soothe worried investors, who are calling for leaders to unveil more concrete measures to boost growth.

A series of pledges to reinvigorate the economy have been made but with very little detail.

Hong Kong led losers, extending a sell-off to a seventh straight day and leaving it more than 20 percent down from its January high.

Shanghai was also in the red along with Sydney, Singapore and Wellington, though Tokyo, Seoul, Mumbai, Bangkok and Jakarta rose.

"Unsurprisingly markets were less than impressed by this move, expecting authorities to be much more forceful. This lack of urgency... is unlikely to spark demand in an economy where loan demand appears to be low anyway," said Michael Hewson of CMC Markets.

- Key figures around 1000 GMT -

London - FTSE 100: UP 0.7 percent at 7,312.48 points

Frankfurt - DAX: UP 0.8 percent at 15,697.40

Paris - CAC 40: UP 1.2 percent at 7,252.29

EURO STOXX 50: UP 1.2 percent at 4,261.66

Tokyo - Nikkei 225: UP 0.4 percent at 31,565.64 (close)

Hong Kong - Hang Seng Index: DOWN 1.8 percent at 17,623.29 (close)

Shanghai - Composite: DOWN 1.2 percent at 3,092.98 (close)

New York - Dow: UP 0.1 percent at 34,500.66 (close)

Euro/dollar: UP at $1.0904 from $1.0874 on Friday

Pound/dollar: UP at $1.2741 from $1.2736

Euro/pound: UP at 85.56 pence from 85.37 pence

Dollar/yen: UP at 145.77 from 145.32 yen

West Texas Intermediate: UP 0.7 percent at $81.83 per barrel

Brent North Sea crude: UP 0.6 percent at $85.33 per barrel

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U.Campbell--SFF