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European shares buoyed by China stimulus plans

Published:  28 Sep at 9 AM

Shares were slightly up across Europe at the end of the week as traders expect an announcement by China it is to introduce further measures to stimulate economic growth. However, investors are remaining cautious because of uncertainty surrounding Spain’s ability to initiate the fiscal reforms and spending cuts it will need for a financial bailout.

An injection of cash into the financial markets by China’s central bank saw basic resources stock gain 1.1 per cent. However the broader market saw less consistent trading as the Spanish government kept putting off an announcement on how the country will go about reducing its massive budget deficit.

In order to be given a bailout from the international community Spain will need to prove it can make the necessary cuts to its spending and slow down a deepening recession. The European Central bank earlier this month pledged to help struggling countries within the eurozone which has helped to keep share prices up.

However analysts are still concerned that much more needs to be done to help Europe out of its current financial crisis and are also concerned about the health of the global economy.

Fears of a continuing slowdown will not have been calmed by the announcement that Hennes & Mauritz, the second largest clothing retailer on the planet, have announced poor results for the third quarter and seen share prices fall by 5.8 per cent.