Singapore: European shares extended their rebound for a second day, led by auto-related companies, as investors bet that state support will limit Chinese market turmoil.

Rio Tinto Group contributed the most to gains in a gauge of miners, rising 1.5 per cent after giving a bullish assessment of China’s steel and copper demand. Glencore Plc added 0.8 per cent as JPMorgan Chase & Co. raised its rating. Among carmakers, Daimler AG, BMW AG and Volkswagen AG rose at least 2.7 per cent. RWE AG led utilities higher, rising 6.5 per cent after Kepler Cheuvreux raised its recommendation on the German company to hold.

The Stoxx Europe 600 Index advanced 1.8 per cent to 361.1 at 10:02am in London. Shares rebounded Monday from the previous week’s decline, with miners leading gains, helped by reassurances from China’s central bank governor that stability would return to markets. Chinese stocks rallied Tuesday for the first time in five days on speculation state-backed funds purchased shares after a weak trade report.

“Concerns about a slowdown are still there, but now the market thinks the Chinese government will provide more support,” said John Plassard, senior equity sales trader at Mirabaud Securities in Geneva. “We’re going to see in the next few days some short squeeze in the market, from people closing their short positions before the fed decision. The sectors that are the most impacted are those that suffered the most, and that’s why you see financials, energy, autos higher.”

Before next week’s Federal Reserve meeting on interest rates, investors also weighed euro-area data showing gross domestic product grew in the second quarter more than initially reported.

Among stocks moving on corporate news, Amlin Plc soared 32 per cent after MS&AD Insurance Group Holdings Inc. agreed to buy the Lloyd’s of London insurer. Telefonica SA added 1.6 per cent after people with knowledge of the matter said the wireless provider is in talks to rent mobile-phone towers in Mexico from America Movil SAB’s Telesites unit to help lower the costs of improving coverage.

Berkeley Group Holdings Plc climbed 2 per cent after reiterating its dividend milestone target for September 2018. Whitbread Plc fell 3.8 per cent after reporting sales at its Premier Inn division missed estimates.