European shares are on track to jump higher after China stocks were put on course for their best week since 2008 amid Beijing’s efforts to inject life into the world’s second largest economy.

The UK’s FTSE 100, France’s Cac 40, Germany’s Dax and Italy’s FTSE MIB are all expected to rise 0.1pc to 0.2pc when markets open after China cut the amount banks must hold in reserve, releasing an estimated £106.6bn in liquidity into the financial market.

The move by the People’s Bank of China comes a day after President Xi Jinping and other top officials admitted to “new problems” in the world’s second-largest economy and outlined plans to get it back on track.

China and Hong stocks rallied following the measures, putting them on track for their best weekly performances in 16 years. 

China’s blue-chip CSI300 and benchmark Shanghai Composite indexes have so far gained 15pc and 12pc, respectively, for the week. Hong Kong’s Hang Seng index has also added nearly 13pc.

Barclays analysts said: “At face value, all measures announced this week signal that the urgency of policy response is not lost on authorities – an important shift in a market that was looking for more than just the bare minimum.

“But in a scenario that would have more far​-​reaching effects on global assets, perhaps this week signals that China is looking to repair its national balance sheet structurally.”

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