The pan-European FTSEurofirst 300 index bounced back on Tuesday as the shares of retailers rallied, after earlier dropping to its lowest level in more than three months.

Shares in Metro rose 3 per cent after the retailer said it had a "very good Christmas business" in Germany, with like-for-like sales up 2.1 per cent in December.

British retailers Tesco, Sainsbury and Marks & Spencer advanced 1.3 to 5.5 per cent, Debenhams gained 15 per cent and Morrisons 15 per cent, respectively after their encouraging trading updates.

Morrisons, Britain's fourth-largest supermarket group, beat expectations for Christmas trading, reporting sales during the holidays rose for the first since 2012.

"At least on a temporary basis, Morrisons seems to have shaken off some of its relegation form and the share price has reacted accordingly," Richard Hunter, head of equities at Hargreaves Lansdown, said.

UK's second-largest department store chain, Debenhams, also posted higher-than-expected sales in the last 19 weeks, driven by strong Christmas trading and growing online shopping .

The FTSEurofirst 300 index was up 0.4 per cent at 1,340.20 points by 0858 GMT, recovering from an intra-day low of 1,331.42, its lowest since late September.

However, market sentiment remained fragile, amid further turbulence in Chinese markets and concern about the pace of economic growth in the world's second-largest economy.

China's equity markets, which tumbled 10 per cent last week and a further 5 per cent on Monday, remained volatile. The Shanghai Composite Index was up 0.2 per cent and the CSI300 index rose 0.7 per cent after moving in and out of negative territory.

Commodity-related shares lost ground as the prices of crude oil and key industrial metals fell on concern about demand. The STOXX Europe 600 Basic Resources index fell 1.0 per cent and the Oil and Gas index 1.7 per cent.

Shares of BHP Billiton, Glencore, Rio Tinto and BP were down 1.4 to 3.3 per cent.

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