European shares rise to claw back some ground after sell-off
LONDON Aug 25 (Reuters) - European shares rose on Tuesday to recover some poise after a sharp sell-off in the previous day that saw around 450 billion euros ($520.70 billion) wiped off the value of leading stocks.
The pan-European FTSEurofirst 300 index, which slumped 5.4 percent on Monday, rose 1.8 percent, while the euro zone's blue-chip Euro STOXX 50 index advanced 1.9 percent.
Britain's FTSE 100 and Germany's DAX also bounced back from a 5 percent drop on Monday to climb by 1.5 and 1.7 percent respectively.
World financial markets have been rattled by China's devaluation of its yuan currency earlier this month and by a sell-off in the Chinese stock market.
Chinese shares slumped again on Tuesday, while Japan's Nikkei fell nearly 4 percent.
Goldman Sachs' strategists cut their position on equities due to the impact of the drop in China, even though they did not expect the Chinese sell-off to cause a global recession.
"In the meantime, we recognize the shift in sentiment that is being reflected in recent price action both in equities and, via falling inflation expectations, in bonds," Goldman's strategists wrote in a note.
"To reflect this, and our view that the markets will continue to worry about these developments in the short term, we are reducing our 3-month recommended asset allocation in equities to 'neutral' from 'overweight'," they added.
($1 = 0.8642 euros) (Reporting by Sudip Kar-Gupta; Editing by Anirban Nag)
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