European shares rose more than 4 percent Tuesday, on track for their best one-day gain since late 2011, with a rate cut from China providing added juice to a recovery from a bruising 48-hour sell-off. Battered mining and technology stocks were the big winners from China's move to support its stuttering economy and a plunging stock market that has sent shockwaves around the globe. China's woes have led to fears of fresh deflationary pressures around the world and the European Central Bank is ready to take additional measures in in the event of a material change in the inflation outlook, the bank's vice-president Vitor Constancio said. "The measures will certainly stabilise sentiment in the short term," said Philip Shaw, chief economist at Investec. "(But in the longer term) it's debatable whether the moves in monetary policy can stabilise equity markets." The pan-European FTSEurofirst 300 index, which slumped 5.4 percent on Monday, was up 4.1 percent at 1120 GMT, as was the blue-chip Euro STOXX 50 index. Miners Glencore and Anglo American were up by between 6 percent and 8 percent, while German chipmaker Infineon and telecoms equipment player Nokia rose 6.5 percent. Swiss agricultural chemicals company Syngenta was up more than 9 percent after a source said that Monsanto had sweetened a takeover offer. World financial markets have been rattled by the sharp sell-off in the Chinese stock market that followed the devaluation of the yuan this month. Chinese shares slumped again on Tuesday, while Japan's Nikkei fell nearly 4 percent. Some investors took heart from a rise in the German IFO business climate index for August and said that domestic demand across Europe was showing broadly positive signs. "There are solid reasons to be worried about the global growth outlook, given emerging markets and systemic fears in China," said Valentijn van Nieuwenhuijzen, head of multi-asset strategy at NN Investment Partners. "However, it is a risk - not yet a reality - that this will spread to the developed world. The IFO number this morning ... shows domestic demand is holding up quite well so far." GOLDMAN CUTS EQUITIES POSITION Goldman Sachs' strategists cut their position on equities to 'neutral' from 'overweight' due to the impact of the drop in China, though they did not expect the sell-off to cause a global recession, citing signs of economic growth in the United States and Europe. "In the meantime, we recognise the shift in sentiment that is being reflected in recent price action both in equities and, via falling inflation expectations, in bonds," they wrote in a note
