European stocks rebound on China liquidity boost

European stock markets advanced on Tuesday after China's central bank injected liquidity to ease fears of a cash crunch in the Asian powerhouse economy, dealers said. In midday deals, London's FTSE 100 index of top companies rose 0.21 percent to 6,846.95, boosted also by talk that the International Monetary Fund was about to lift its economic growth forecasts for Britain. In Paris, the CAC 40 index climbed 0.30 percent at 4,336.12 points, despite a gloomy profits warning from French engineering and power group Alstom. And Frankfurt's DAX 30 index added 0.36 percent to 9,750.29 points after the key ZEW survey showed that German investor sentiment stalled unexpectedly in January but signalled that recovery of Europe's top economy remained intact. The euro fell against the dollar and British pound. Asian equities also rallied on Tuesday after the People's Bank of China (PBoC) said late Monday that it had provided short-term liquidity to some large commercial banks to avert a potential cash crunch. The central bank also injected 255 billion yuan ($41.8 billion) worth of funds into the interbank market on Tuesday. "It’s been a positive day so far in the financial markets, largely driven by the additional liquidity that was pumped into the money markets overnight by the People’s Bank of China," said analyst Craig Erlam at trading firm Alpari. "The move was simply done to offset the larger demand for cash over the course of the Chinese New Year." European stocks had diverged on Monday in subdued deals after official data revealed a Chinese economic slowdown last year. Later on Tuesday, investors will digest major US company results including IBM and Verizon, as Wall Street reopens for business after a public holiday on Monday. In company news on Tuesday, Paris stock market gains were capped after Alstom warned on profits. Alstom shares plunged by nearly 13.0 percent in initial trading after the group revealed it would take longer than expected to achieve a promised increase in its operating margins. The stock later stood at 24.515 euros, down 11.67 percent from Monday's closing level. "The (stock market) reaction would suggest a complete void of confidence, which was mirrored by analysts at Societe Generale who cut (their) target price by near 20 percent to 26 euros," said CMC Markets analyst Toby Morris. "The firm will now look to address debt obligations by selling up to 2.0 billion euros of assets by the end of the year," he added. Back in London, Anglo-Dutch food and cosmetics group Unilever saw its share price rally 3.79 percent to 2,529.35 pence after news of soaring annual earnings. Net profits surged 11.0 percent to 4.84 billion euros ($6.56 billion) in 2013, despite a modest dip in sales, the group said in a results statement. In foreign exchange activity on Tuesday, the European single currency slid to $1.3537 from $1.3552 late on Monday in New York. The euro dipped to 82.39 pence from 82.48 pence on Monday, while the pound rose to $1.6440 from $1.6414. Gold prices slipped to $1,248.96 an ounce from $1,255.75 on Monday on the London Bullion Market.