European Stocks Rally for Third Consecutive Day

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European stocks climbed for a third consecutive day Wednesday, following their Asian peers higher amid renewed optimism China’s central bank would take additional measures to contain volatility in its equities market.

All of Europe’s major averages ended sharply higher, led by a 2.9% gain on Madrid’s Ibex 35 Index. The CAC 40 in Paris added 2.6%, the FTSE in London surged 2.1% and the DAX in Frankfurt added 1.8%. The pan-European STOXX 600 Index advanced 2.4% on the day.

European markets tracked gains in Asia on Wednesday, with all of China’s mainland averages rising for a second consecutive day. The Shanghai Composite Index rose 2.3% to 3,243.09. Hong Kong’s Hang Seng Index surged 4.1% to 22,313.31, with all but two of its 50 blue chips reporting gains.

After declining in the previous session, Tokyo’s Nikkei soared 7.7% or 1,343.43 points to 18,770.51. All 225 of the companies listed on the Tokyo benchmark reported gains.

While China’s economy appears to be slowing, Beijing has remained steadfast in its commitment to limit capital flight from its equities market. The People’s Bank of China said earlier this week that the broad stock market correction was almost over and that its intervention helped stave off an even bigger downturn.

Beijing’s National Bureau of Statistics will report on consumer and producer inflation on Thursday.

Despite the rally in equities, oil prices slipped Wednesday, with US crude futures falling for a third consecutive day. The price of West Texas Intermediate (WTI) for October delivery bottomed out at $45.13 a barrel Wednesday. It would subsequently consolidate at $45.55, declining 39 cents.

After briefly touching $50 in intraday trade, global benchmark Brent crude was down 30 cents at $49.22 a barrel.

Crude prices remain under pressure amid a persistent oversupply of oil. According to analysts, the global supply glut could intensify in the next several months as Iran ups its exports. The Organization of the Petroleum Exporting Countries (OPEC) – a 12-member oil cartel mainly consisting of Middle Eastern producers – is still producing at near record levels.

In currencies, the US dollar rallied Wednesday, as investors shifted their focus to next week’s Federal Reserve policy meetings. The greenback rebounded sharply against the euro, with the EUR/USD falling 0.6% or 67 pips to 1.1136.

The dollar also regained the 121.00 handle against the Japanese yen. The USD/JPY advanced 1% to 121.05.