European Shares To Open On Firm Note As China Steps Up Stimulus

European stocks are seen opening broadly higher on Tuesday, with resource stocks likely to surge after China’s central bank announced a slew of measures to spur sluggish economic growth.

The People’s Bank of China said it would cut the reserve requirement ratio by 0.5 percentage points in the near future.

The central bank also announced plans to reduce interest rates on existing mortgages and standardize down payment ratios to bolster demand in the property sector and stimulate growth.

Asian stocks traded mixed, with Chinese and Hong Kong markets rallying sharply on optimism that the latest stimulus measures would help support the economy.

Investor focus was also on the Reserve Bank of Australia, which held its key interest rate at a 12-year high today, citing stubborn price pressures.

The European economic calendar remains light, with business confidence survey data from Germany awaited later in the day.

The ifo business climate index is forecast to fall to 86.1 in September from 86.6 in the previous month.

The dollar was under pressure while gold held near record levels due to expectations for more U.S. rate cuts after Fed officials said last week’s large interest rate cut was warranted.

Oil prices jumped more than 1 percent in Asian trading after Israel launched its biggest aerial offensive against Iran-backed Shite militant group Hezbollah.

U.S. stocks closed marginally higher overnight as Fed officials hinted at further easing and the Bloomberg reported that Apollo Global Management (APO) has offered to make a multibillion-dollar investment in Intel.

On the data front, a gauge of U.S. business activity held steady in September, but average prices charged for goods and services rose at the fastest pace in six months.

The Dow edged up 0.2 percent and the S&P 500 added 0.3 percent to post record highs, while the tech-heavy Nasdaq Composite inched up 0.1 percent.

European stocks closed higher on Monday despite weak business activity readings from the euro zone and the U.K.

The pan European STOXX rose 0.4 percent. The German DAX climbed 0.7 percent, France’s CAC 40 edged up 0.1 percent and the U.K.’s FTSE 100 advanced 0.4 percent.