European shares bounced on Thursday after a 4 percent fall this week, tracking global equities higher on efforts by China's central bank to steady a falling yuan that has stirred markets world-wide. The pan-European FTSEurofirst 300 index was up 0.9 percent at 1,530.17 at the close, trimming gains in late trade as a falling oil price hit energy firms.
Automakers and luxury goods stocks, among the worst hit this week, were among the biggest gainers after China's central bank said there was no reason for the yuan to fall further. "I don't think what has happened so far is a game changer... Yesterday the market was pricing a big collapse of China as an economy, and I don't think that is realistic," said Ankit Gheedia, equity and derivatives strategist at BNP Paribas. "The People Bank of China has a lot of firepower. If they say something, they can back it up. They are a credible central bank in my view."
European equities hit their lowest level in a month in the wake of China's move to allow its currency to fall. But by Thursday there were signs the pace of decline was slowing after the central bank set a midpoint for the currency that was not as low as expected. Better-than-expected profit results from shipping and oil group Moller Maersk and a positive earnings outlook from travel firm TUI sent shares in the two companies up around 6 percent.
Nestle reported worse-than-expected half-year sales, hurt by a recall of its Maggi noodles in India, though the Swiss food group's shares rose 2.7 percent after it said it maintained its 2015 outlook. Among standout losers, shares in Germany's No 2 utility RWE dropped 7.9 percent after it posted a weaker-than-expected profit in the first half, hit by a mix of low wholesale power prices, a small footprint in renewables and problems at its UK business.
"Conventional power generation was below our estimates, and the UK supply operations (Npower) were a major disappointment," John Musk, analyst at RBC Capital Markets, said in a note. Dutch insurer Aegon slumped 7.5 percent after it missed earnings forecasts. While fears over Greece's ability to avert financial ruin appear to have receded, the European Union moved to keep Greece on a tight rein after its latest bailout. Sources said the 85 billion euro deal will be reviewed by lenders in October and any discussion of debt relief will only come at a later stage. Greece's Athex stock index edged 0.7 percent lower.