World stock markets climb after two-day Brexit rout

Tue Jun 28, 2016 5:31pm EDT
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By Hilary Russ

NEW YORK (Reuters) - European and U.S. shares rebounded on Tuesday and the battered pound rose as markets digested Britain's vote last week to leave the European Union.

Bargain-hunting lifted stocks worldwide for the first time in three days, but there was still widespread uncertainty as the bloc's leaders, including soon-to-be-ex UK Prime Minister David Cameron, held their first post-vote meeting in Brussels.

Britain's finance minister, George Osborne, said the country would have to cut spending and raise taxes to stabilize the economy after a third credit ratings agency downgraded its debt.

"The lingering uncertainty favors further downside in the coming months as we have seen with other shocks of the past 5 years," said Jeffrey Kleintop, chief global investment strategist at Charles Schwab & Co., Inc.

Still, the stock sell-off paused on Tuesday. European shares .FTEU3 rose 2.4 percent, clawing back some of their 10 percent loss the wake of the UK's vote.

Bank shares recovered and led markets higher. The S&P financial index .SPSY rose 2.47 percent.

Britain's Lloyds (LLOY.L: Quote) and Barclays (BARC.L: Quote) gained through the day, jumping 7.43 percent and 3.38 percent respectively. Italy's UniCredit (CRDI.MI: Quote) rose but then pulled back, last up 1.52 percent, and Spain's Bankia (BKIA.MC: Quote) surged more than 9 percent before falling back slightly to a 8.24 percent gain.

On Wall Street, the Dow Jones industrial average .DJI rose 269.48 points, or 1.57 percent, to 17,409.72, the S&P 500 .SPX gained 35.55 points, or 1.78 percent, to 2,036.09 and the Nasdaq Composite .IXIC added 97.42 points, or 2.12 percent, to 4,691.87.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, New York, U.S. June 28, 2016. REUTERS/Brendan McDermid