Europe open: Stocks bounce back after early weakness

Europe's main equity indices recovered after a weak start on the last day of the quarter, with some traders pointing to better-than expected data out of China as the main catalyst behind the turnaround.

As of 0905 BST, the benchmark Stoxx 600 was edging higher by 0.17% or 0.70 points to 381.36, with the Cac-40 rising by 0.33% or 16.96 points to 5,171.10 but the Dax slipping 0.03% or 5.52 points to 12,410.67.

In parallel, front month Brent crude futures were up by 0.71% to $47.76 per barrel on the ICE while euro-dollar was slipping 0.29% to 1.1408.

"A negative opening call comes after a weak Wall St finish (Tech underperforming) extended to Asia overnight as a bond market sell-off inspired by hawkish (perhaps misconstrued) central bank comment proves contagious for equities.

"After years of low rates and QE pushing the two sector asset classes to record highs, the relationship appears to hold even in the case of a reversal. Sentiment is however off its lows thanks to China PMI data and major equity levels having held up," said Mike van Dulken and Henry Croft at Accendo Markets.

Overnight, the official Chinese manufacturing sector purchasing managers index improved from a reading of 51.2 to 51.7, far surpassing the 51.0 forecast by analysts.

Nonetheless, Julian Evans-Pritchard at Capital Economics was unconvinced by the figures, telling clients they should be taken with a 'pinch of salt' given how they had been diverging recently from more reliable measures which had been pointing to easing momentum in the economy.

Data out of Europe on the other hand was generally upbeat.

French household consumption accelerated sharply in May, jumping by 1.0% month-on-month (consensus: 0.7%) after a gain of 0.4% during the previous month, according to INSEE.

Meanwhile, a separate report revealed that consumer prices in the euro area's second largest economy dipped by a tenth of a percentage point in June, as expected.

In other key data, joblessness in Germany rose by 7,000 in June, exceeding forecasts calling for a drop of 10,000, although the rate of unemployment in the euro area's largest economy dropped by a tenth of a percentage point to 5.5% - its lowest level since 1991.

German retail sales meanwhile were 0.3% higher month-on-month.

Still on the economic calendar for later in the day, Eurostat was due to publish its consumer price data for the month of June at 1000 BST.

RWE's chief told Frankfurter Allgemeine Zeitung the company was planning an additional €300m of savings by 2020.