Europe open: Shares rally on hopes China may ease Covid curbs

European shares rallied at the open on Tuesday after a recovery in Asian markets on hopes that China may respond to protests over its strict Covid policies and relax curbs on the population.

The pan-regional Stoxx 600 index was up 0.44% at 0847 GMT.

“Risk-on sentiment has lifted European equities this morning boosted by a rally overnight in China after the health authorities held a briefing this morning in response to the recent rare protests. The oil & gas sector is outperforming thanks to a strong rebound in Brent and WTI,” said Interactive Investor head of investment Victoria Scholar.

"After Monday’s losses, Chinese markets are staging gains with the Hang Seng surging more than 5%, the Shanghai Composite rallying over 2% and the Hang Seng Tech Index up by more than 5.5%.

The news boosted mining stocks, all of whom are reliant on Chinese demand for metals. Rio Tinto, Anglo American, Glencore and Antofagasta were all higher.

Asia-focused financial services firms also rose, with Prudential and Standard Chartered up.

Shares had reversed on Monday after rising protests in several Chinese cities and rising Covid cases sparked fears among investors of a slowdown in the world’s second largest economy.

China's National Health Commission issued a notice to increase Covid vaccinations for the elderly and shorten the time between basic vaccinations and boosters to three months for those aged 80 and above, while a health official said the unrest related to complaints are about extra measures and a one size fits all approach rather than the curbs themselves.

In equity news, easyJet flew lower despite upbeat prospects for next summer and a narrowing of annual losses.

Chipmaker ASM International gained after upgrading fourth quarter guidance.

Reporting by Frank Prenesti for Sharecast.com