European Stocks Recover Following Sell Off--2nd Update

By Tommy Stubbington 

European stocks staged a modest recovery from a four-week low Friday as markets steadied after a week of heavy selling and a sharp sell off on Wall Street overnight.

The Stoxx Europe 600 index was 0.2% higher midway through the session.

"After a decline like this, relative valuations give the market some support, because bonds look expensive," said Ian Williams, economist and strategist at brokerage Peel Hunt.

Thursday saw a 1.6% decline in the S&P 500 after investor sentiment was hit by a combination of high stock prices, worries about the path of U.S. monetary policy, uncertainty stemming from the global economy and conflicts in the Middle East.

The sell off continued in Asia, where Japan's Nikkei dropped 0.9%, but markets steadied in Europe. Germany's DAX rose 0.2% despite data showing German consumer confidence is expected to deteriorate for a second consecutive month in October.

France's CAC 40 was 0.8% higher, and the U.K.'s FTSE 100 added 0.1%.

Despite the bounceback, equity markets in Europe remain in a "fairly precarious" situation given the lack of growth in earnings, Mr. Williams said.

U.S. stock futures pointed to a 0.1% rise for the S&P 500. Changes in futures aren't necessarily reflected in market moves after the opening bell.

In currency markets, the U.S. dollar chalked up small gains, pushing it close to the near two-year high against the euro it reached on Thursday before the equity selloff pulled it back somewhat. The euro was 0.2% lower at $1.2735.

The Russian ruble tumbled to a fresh record low against the dollar, with the currency's slide showed little sign of abating despite the cease-fire in Eastern Ukraine.

"There's a sensation in markets that the cease fire is very fragile, and people are starting to question how it's going to hold," said Ilan Solot, an emerging-market strategist at Brown Brothers Harriman.

The ruble fell more than 1% to 38.982 to the dollar.

In corporate news, banknote printer De La Rue plummeted after the firm announced a profit warning.

Air France-KLM was also among the fallers as a pilots' strike at Air France entered its 12th day.

In commodities markets, gold climbed 0.1% to $1,223.60 an ounce, and Brent crude oil rose 0.3% to $97.33 a barrel.

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