European markets open strongly after China gains

The FTSE 100 opened 2.2% higher on Thursday (27 August), clawing back the 1.7% loss it made yesterday on the back of stock market turmoil in China.

Markets across Western Europe jumped immediately after opening following a week of heavy losses linked to fears of an economic slowdown in China.

The German DAX jumped back above 10,000 points, gaining 2.58% just minutes after the opening bell. Fance's CAC 40 opened 2.6% higher to 4,617.53 after suffering a 1.3% drop the day before.

"The positive opening call comes as Asian stocks tracked the biggest gains in US equity markets in four years following a two-week sell-off that drove stock valuations to their lowest since 2012," Augstin Eden, analyst at Accendo Markets said.

The Shanghai Composite closed 5.3% higher on Thursday, the first day of gains since 19 August, crossing the vital 3,000 points mark, while the Japanese Nikkei increased by 1.1% and Hong Kong's Hang Seng jumped by 2.9%.

On Wall Street the Dow Jones Industrial average closed 3.97% higher on Wednesday, standing at 16,285.64.

US investors regained optimism after durable goods orders jumped 2.2% in July, the biggest rise in more than a year. The US Department of Commerce also revealed that retail sales, the housing market and overall consumer spending in the US indicate a continued economic recovery.

Philip Marey, senior analyst at Rabobank, said: "All in all, the markets have calmed somewhat, but it is a fragile equilibrium."