European Stocks Climb as China Cash Crunch Eases

European stocks advanced for a second day as China's cash crunch eased and German consumer confidence climbed. U.S. index futures were little changed, while Asian shares gained.

Colruyt (COLR) SA jumped 5.7 percent after reporting full-year earnings that beat analysts' estimates. GSW Immobilien AG, Berlin's largest residential landlord by market value, advanced 5.3 percent after saying both its chairman and chief executive officer will leave.

The Stoxx Europe 600 Index rose 0.5 percent to 281.18 at 8:28 a.m. in London. The gauge has still slumped 9.5 percent since May 22, when Federal Reserve Chairman Ben S. Bernanke commented on the possibility of paring bond purchases. The gauge has dropped 4.3 percent this quarter, trimming its 2013 advance to 0.5 percent.

"The situation in China is slowly beginning to be the main risk for the markets," said Jean-Paul Jeckelmann, chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland, who helps manage $1.4 billion in equities. "The Chinese central bank's liquidity pledge has calmed markets in the short term, but the picture is not that clear in the medium term. The first leg of the correction is close to over and the markets should be more stable going into month end."

The MSCI Asia Pacific Index rose 1 percent today, while Standard & Poor's 500 Index futures slipped 0.1 percent.

China Liquidity

The cost of locking in China's interest rates slid for a fourth day and money-market rates fell after the central bank pledged to ease the worst cash crunch in a decade. The People's Bank of China has provided financing to some financial institutions to stabilize interbank lending rates and will use short-term liquidity operations and existing loan-facility tools to ensure steady markets, according to a statement yesterday.

The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repurchase rate, slid 16 basis points, or 0.16 percentage point, to 3.91 percent as of 11:18 a.m. in Shanghai, data compiled by Bloomberg show. It reached an all-time high of 5.06 percent on June 20.

"The vicious moves lower on fears of Fed tapering and a Chinese credit crunch seem to have abated for now and tentative buyers are feeling a little confidence about dipping their toes back into the market," Jonathan Sudaria, a trader at Capital Spreads in London, wrote in an e-mail. China's central bank "soothed Asian markets by stating that it had pumped cash into some financial institutions," he said.

German consumer confidence will rise to the highest level since 2007 next month, GfK AG said today. The sentiment gauge climbed to 6.8 from 6.5 in June, topping economists forecasts in a Bloomberg survey.

Spending Plans

In the U.K., Chancellor of the Exchequer George Osborne is set to outline cuts to government spending in 2015. In a statement to Parliament, Osborne will detail 11.5 billion pounds ($18 billion) of savings negotiated with government departments for the year starting April 2015. With the cuts extending the deepest austerity program in British peacetime history into a sixth year, Osborne is highlighting 50 billion pounds of spending on infrastructure projects to help spur the economy.

Colruyt gained 5.7 percent to 39.12 euros. Belgium's biggest discount food retailer said full-year earnings before interest, taxes, depreciation and amortization amounted to 699.8 million euros, beating the average 684 million-euro analyst projection in a Bloomberg survey. The company also raised its dividend to 1 euro a share, exceeding the Bloomberg Dividend Forecast of 98 cents.

GSW Gains

GSW increased 5.3 percent to 30.04 euros. CEO Bernd Kottmann will leave his post on July 15 after investors protested how he was hired, Berlin-based GSW said in a statement late yesterday. Chairman Eckart John von Freyend will leave on July 31. The decision ends two months of conflict that ended at a meeting in Berlin last week at which shareholders passed a no-confidence motion against Kottmann and voted to dismiss Freyend.

Afren Plc rallied 7.4 percent to 130.7 pence. The U.K.- based energy company focused on West Africa and Iraq said its Ogo-1 well offshore Nigeria discovered light oil accumulation, based on results of drilling and wireline logs.