Stock market recovery on feet of clay - investors still unsettled

INSURERS UNDER PRESSURE - H&M IN DEMAND

Frankfurt (Reuters) - Europe's investors remain on the brakes in view of the uncertain outlook for equities.

After the recent price losses, the Dax and EuroStoxx50 at least stabilized on Wednesday: the leading German index remained at 15,258 points until the afternoon, while its European counterpart rose by 0.3 percent to 4,138 points. An easing of the recent rapid rise in bond yields supported prices on Wall Street somewhat in pre-market trading.

However, stock market analysts cited high inflation coupled with fears of a further rise in interest rates and the uncertain future outlook for the economy as remaining negative factors. This was also underpinned by the GfK consumer researchers, who predicted that their barometer would fall by 0.9 points to minus 26.5 points in October and were therefore more pessimistic than expected. "This means that the chances of a recovery in consumer sentiment before the end of the year have probably fallen to zero," said GfK expert Rolf Bürkl. "The sting of uncertainty is extremely deep," stated Alexander Krüger, chief economist at private bank Hauck Aufhäuser Lampe.

CHINA WORRIES AND POSSIBLE SHUTDOWN WEIGH DOWN

The smouldering real estate crisis in China, at the heart of which is the highly indebted property developer China Evergrande, is also contributing to this. A report by the Bloomberg agency on Wednesday, according to which chief executive Hui Ka Yan has been placed under police surveillance, raised further doubts about the continued existence of the world's most indebted real estate developer. Evergrande shares again lost around 19 percent. A possible government shutdown in the US is also making investors nervous. "There may be uncertain times ahead, and as the old saying goes, markets hate uncertainty," said Oanda market analyst Craig Erlam.

On the oil market, speculation about a shortage of supply once again took over. As a result, the price of North Sea Brent crude rose by 1.7 percent to 95.54 dollars per barrel. US light oil WTI rose by 2.1 percent to 92.35 dollars. Investors are concerned that US crude oil stocks at the most important storage center in Cushing, Oklahoma, could fall below the minimum operating level. This would exacerbate the supply shortage caused by production cuts by the Organization of the Petroleum Exporting Countries and its allies.

Investors were also uncertain about the financial consequences a court ruling could have for the Netherlands' largest insurer NN. An appeals court had ruled against the company in a case concerning unit-linked insurance policies sold in the 1990s and 2000s. NN shares plunged by around 16 percent in Amsterdam to their lowest level for almost three years. The shares of rival ASR also fell by more than ten percent.

By contrast, the outlook for H&M was rosier. A surprisingly high quarterly profit made investors forget the Swedish fashion retailer's declining sales in September. The shares were around four percent higher. Siemens made it to the top of the Dax with a price gain of 4.2 percent and, at 135.32 euros, was trading at its highest level for almost nine months. Traders explained the jump in the share price by the fact that Siemens had apparently made no change to its forecasts during a telephone call with analysts from the US bank JP Morgan. The market had previously expected a warning or something negative on the outlook, said one trader.

(Report by Anika Ross, Stefanie Geiger, edited by Kerstin Dörr. If you have any questions, please contact our editorial team at [e-mail] (for politics and the economy) or [e-mail] (for companies and markets)