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European shares rebound; eyes on euro zone meeting

European stocks rose in early trade on Friday as bargain hunters jumped in following a sharp three-session drop, betting that euro zone finance ministers will agree to double the region’s bailout funds in a meeting later in the day.

At 0706 GMT, the FTSEurofirst 300 index of top European shares was up 0.6 percent at 1,064.98 points, after losing 2.7 percent in three days.

A draft statement by the ministers, obtained by Reuters, showed that in case of an emergency over the next 15 months, the euro zone could raise the combined firepower of its two bailout funds to 940 billion euros from 500 billion now.

Cyclical mining shares were among the top gainers, with Rio Tinto up 1.5 percent and Xstrata up 0.7 percent.

But despite Friday’s recovery, chartists remained cautious on the outlook for European stocks for the next few weeks.

“All the European markets have broken below their 2012 trend channels, and except for the DAX, all the 50-day moving averages have been pierced on the downside. Now, indices are getting close to March lows,” Aurel BGC chartist Gerard Sagnier said.

“It’s not impossible to see a very short-term technical bounce, but we’ll have to wait for the consolidation phase, which has just started, to stabilise before going ‘long’ again.”

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