European stocks climbed as investors speculated that the fallout from Greece’s debt crisis can be restrained, while Chinese equities rebounded.
The Stoxx Europe 600 Index added 1.5 percent to 378.4 at 10:33 a.m. in London. On Wednesday the gauge closed just under 10 percent below its April record.
The Greek authorities are working to pull together economic reform proposals to convince European creditors that it can stay in the euro area. Prime Minister Alexis Tsipras has until midnight Thursday to introduce a plan that includes spending cuts, in exchange for a new European bailout.
However, European Central Bank President Mario Draghi has voiced unprecedented doubts about the chances of rescuing Greece from bankruptcy.
According to Italian media source Il Sole 24 Ore, Draghi said he was not sure a solution would be found for Greece and he did not believe Russia would come to Athens' rescue, as "they do not have money themselves."
Equities in so-called peripheral markets were among the biggest gainers Thursday, after bearing the brunt of a two-day selloff following the Greek vote against austerity. Spain’s IBEX 35 Index added 1.7 percent and Portugal’s PSI 20 Index climbed 1.8 percent. The Athens stock exchange will remain closed through July 13.
China
In China, stocks advanced in volatile trading as the government battled to restore investor confidence.
Its persistent attempts to stem a stock market rout were finally rewarded as Chinese shares bounced around 6 percent on Thursday, but the costs of heavy-handed state intervention are likely to weigh on the market for a long time, says Reuters.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen pushed higher to close up 6.4 percent, while the Shanghai Composite Index bounced 5.8 percent for its biggest daily percentage gain in six years.
Asian markets recovered in line with China’s gains. Japan’s Nikkei 225 Stock Average rose 0.6%, Australia’s S&P/ASX 200 erased early losses to close up 0.2% and South Korea’s Kospi was up 0.6%.
But China's malfunctioning stock markets remained semi-frozen, with the shares of around 1,500 listed companies worth around $2.8 trillion - roughly half the market - suspended, and many of those still trading propped up by state-directed buying.
Since the middle of June, over 25 percent has been knocked off the value of Chinese equities, and for some global investors the fear that China's market collapse will destabilize the financial system is now a bigger risk than the crisis in Greece.
