European shares recover

European stocks increased on Tuesday, as an upbeat economic sentiment reading from Germany and sufficient demand at a government debt auction in Spain helped lower the risk aversion and attract investors back to the equity market following a month-long sell-off, reports Reuters.

However, technical strategists said it was too early to say the downward trend had come to an end, with the latest move expected to be just a short-lived correction.

By 1028 GMT, the FTEU3 (FTSEurofirst 300 index) had risen by one per cent to 1,042.44 points, extending its gains into a second day. Meanwhile, the STOXX50E (Euro STOXX 50 index of eurozone blue chips) went up by 1.6 per cent to 2.337.11 points, rebounding from technical support of 2,300 after it had remained in the oversold territory in the seven-day relative strength index (RSI) for roughly two weeks. However, the index has still fallen by 11 per cent during the last month.

Investors were reassured after Spain increased its target amount, even though it is paying higher yields, at a short-term Spanish debt auction, viewed as a litmus test for a long-term paper sale on Thursday as the country attempts to avoid an international bailout by shoring up its finances.