European stocks rally on China stimulus

Europe's main stock markets rebounded Monday after China announced a raft of stimulus measures to bolster growth, eclipsing fears over Greece, dealers said.

In late morning deals, London's FTSE 100 index jumped 0.73 percent to 7,045.80 points.

In Paris, the benchmark CAC 40 index added 0.45 percent to 5,166.40 points and Frankfurt's DAX 30 won 1.66 percent to 11,883 compared with Friday's close.

In foreign exchange, the euro retreated to $1.0740 from $1.0810 late in New York on Friday.

"European markets were greeted with the news that China has taken a further step down the road of stimulus," said analyst Alistair McCaig at trading firm IG.

China's central bank announced Sunday it would cut the reserve requirement ratio (RRR) -- or amount of cash that commercial banks must hold in reserve -- by one percentage point, the second such move this year to boost lending.

The move, effective Monday, comes days after the world's second largest economy reported its worst quarterly growth figure for six years.

In a statement on its website, the People's Bank of China (PBoC) said it will give a one-percentage-point cut to banks for agricultural services and a further two-percentage-point cut to the Agricultural Development Bank of China.

However, Shanghai and Hong Kong stocks tumbled as Chinese authorities also unveiled restrictions on dealers borrowing cash to trade shares.

Shanghai sank 1.64 percent and Hong Kong dived 2.02 percent, while Sydney shed 0.76 percent and Tokyo was marginally lower.

"News that China had applied further economic stimulus measures to boost its ailing economy distracted investors," added Accendo Markets analyst Augustin Eden.

"Global markets were reassured by the action, largely expected throughout 2015 and arguably already priced into the Asian markets, which remained mixed in Monday trading as a result."

Europe's equities had slumped on Friday as investor worries intensified over Greece.

Athens was told Saturday to urgently deliver a detailed fiscal and debt plan to official lenders, while European Central Bank chief Mario Draghi cautioned that not reaching an agreement would take the situation into "uncharted waters."

There are fears that if Greece does not service its huge debts it will default and tumble out of the eurozone, fuelling worries about the knock-on effects for the global economy.

"The situation in Greece is... going to continue to make headlines ahead of the Eurogroup meeting on Friday," said Oanda analyst Craig Erlam.

"So far, Greek leader Alexis Tsipras has been both unwilling and unable to offer a list of acceptable reforms to the country's lenders in order to release the 7.2-billion-euro bailout that was agreed as part of the extension earlier this year.

"Without the funds, Greece will default on its debt and could be forced out of the eurozone and into a devastating financial crisis."