European markets steady after Chinese shares rise

Traders also welcomed China’s decision to dump its unpopular stock market “circuit-breakers”, helping to restore a measure of risk appetite.

USA lawmakers, meanwhile, were uncharacteristically silent about a further deterioration in the value of China’s currency, after the yuan fell for an eighth day on investor fears about China’s economy.

Chinese markets appear to have stabilised with the Shanghai Composite index is up 1.97 per cent to 3,186.41 in afternoon trading, having opened higher.

After the rout, Chinese authorities suspended the new trading “circuit breakers” that are meant to damp panic but which many market-watchers argue sowed more panic, according to China’s official Xinhua news agency.

Energy shares rebounded with oil as the MSCI Emerging Markets Index climbed from a six-year low.

“A turbulent start to 2016 has seen investors adopting the brace position, as a combination of factors have driven global markets lower”, Richard Hunter, Head of Equities, Hargreaves Lansdown Stockbrokers, said in a note.

In London, the FTSE 100 was up 21.5 points, or 0.36%, at 5,975.5. Germany’s Dax and France’s Cac 40 were also ahead.

The Standard & Poor’s 500 index rose 11 points, or 0.6 percent, to 1,953.

“Whilst this week’s volatility in the Chinese market has largely been led by concerns about the circuit breaker mechanism, there remains underlying issues with the Chinese economy which investors are increasingly wary of”.

Trading in China was volatile again on Friday, the first day since the suspension of the circuit breaker. “Or if the government itself knows or is capable of implementing the policy even if there is one”, said DBS bank.

Japan’s Nikkei 225 index lost 0.4% to close at 17,697.96 while Hong Kong’s Hang Seng index gained 1% to 20,541.96 on Friday. But on Friday the central bank set the guidance rate higher at 6.5636 per dollar and intervened to support the spot rate via state-owned banks, which some market watchers hoped was a signal that it would not let the currency slip much more for now.

Taiwan’s central bank entered the market, as it has done nearly every session recently, to prop up the USA dollar and slow down the pace of the Taiwan dollar’s appreciation in an attempt to protect the country’s exports, they said. Another sharp drop came on Thursday, when the yuan rate fell to its lowest in about five years.

“We suspect this is poor communication by the People’s Bank rather than a deliberate devaluation”, said David Rees of Capital Economics in a report.

A flurry of Chinese economic data in the coming weeks is likely to show economic activity continued to slow in December, adding to concerns about the outlook for 2016. Those fears have drowned out signs that the United States and Europe are doing fairly well. It still has $3.3 trillion in cash, but that’s the lowest level since late 2012. The benchmark USA contract rebounded moderately Friday, rising 19 cents to $33.46 in electronic trading on the New York Mercantile Exchange. Analysts believe Beijing is letting the renminbi, as the yuan is also known, fall but is finding it hard to control the speed of its descent because of speculative pressure in the offshore yuan market.

The dollar-yen pair recovered to trade at 118.31 after falling as low as 117.47.