European equities struggle to follow Asian recovery

STORY: European equity markets struggled to join a global recovery Tuesday.

The pan-European STOXX index gained 0.8% from the open, but then fell back.

After initial gains, London’s FTSE index was soon in the red again.

That all followed a soaring rebound in Asia earlier.

Japan’s Nikkei index jumped 10%, recovering most of the previous day’s meltdown.

Markets regained their poise after reassurance from officials at the U.S. Federal Reserve, who said they were alive to the dangers of a downturn.

Data on the country’s service sector also pointed to a recovery.

Tuesday then brought hopeful figures for Europe too, with German industrial orders smashing forecasts.

Finance expert Angel Zhong at Australia’s RMIT university says worries over the U.S. economy are overdone:

“In terms of the labour market, so even though there is a recent rise in unemployment data, but the other labour market indicators are still showing a certain degree of strength, and then, in terms of the Fed, the Fed is expected to potentially cut interest rates. If they do so, that means it will help stimulate the economy and it will avoid a recession.”

Currency markets also reversed some of the previous day’s moves.

The dollar pared losses against the Swiss franc, which is often seen as a relative safe haven.

But the turmoil may be far from over.

Market volatility gauges, including the Vix - Wall Street’s so-called “fear index” - remain at elevated levels.

Concerns remain too over the very high valuations for tech stocks, after months of gains.

One analyst told Reuters that only the “bravest” equity investors would be jumping back in to buy now.