A look at the day ahead in European and global markets from Tom

Westbrook

Gravity brought China's soaring stock market back to earth

with a thud on Wednesday. Disappointment about the lack - so far

- of follow-through on stimulus promises has triggered a

pullback in a spectacular rally and could be a harbinger of

further weakness in China-exposed assets trading in London and

Europe.

At the time of writing, the Shanghai Composite was

down more than 5% and headed for its largest slump since the

pandemic collapse of February 2020.

A bounce in Hong Kong was quickly snuffed out. Metals and

other commodities were on the slide along with China proxies

such as the Australian dollar.

China watchers say yesterday's National Development and

Reform Commission news conference was never going to be the

forum for a substantial policy announcement.

"More patience please," noted HSBC economist Jing Liu in a

note pointing out that we are yet to hear from the State Council

or the finance ministry on the specifics of stimulus.

But, clearly, the opportunity to reassure markets has been

missed and the rally is unlikely to be sustainable until

authorities show investors the money, and lots of it.

China volatility already pulled down European miners and

luxury stocks on Tuesday but further drops in the iron ore price

and selling of Rio Tinto and BHP shares in

Sydney suggest more pressure ahead.

Elsewhere the New Zealand dollar slid through its

200-day moving average as the central bank cut interest rates by

50 basis points and left the door open to further cuts - just as

markets are paring back their expectations for U.S. rate cuts.

Indian government bonds rallied after FTSE Russell said they

would be included in its emerging markets' index. South Korean

government bonds were added to the FTSE World Government Bond

Index (WGBI) but were not traded owing to a public holiday.

Minutes for September's Federal Reserve meeting are due

later in the session, though they may not add much since Fed

officials have been out in force in recent days pointing out

last week's strong jobs reading is positive for the economy.

Key developments that could influence markets on Wednesday:

- German trade data

- September Federal Reserve minutes

(Editing by Muralikumar Anantharaman)