IVTJY Investec Plc (PK)

U.S. stock futures rallied on Tuesday after the Labor Day holiday, tracking gains in Europe and China.

Futures contracts pointed to the Dow Jones Industrial Average opening 1.7% higher and the S&P 500 adding 1.8%. Futures don't always accurately reflect moves after the opening bell.

The Stoxx Europe 600 index was 1.9% higher around halfway through the session, while the Shanghai Composite Index ended up 2.9%.

Some investors said markets have started to adjust to worries over a slowdown in China's economy, but that there was still potential for volatility fueled by China and uncertainty around a rise in U.S. interest rates.

"China is still the most important thing impacting investors," said Darren Ruane, head of fixed income at Investec Wealth & Investment, which oversees around $43 billion. "We think growth is slowing down but the economy is not going to collapse. We think, in the end, the impact on markets is going to be limited, but there is room for further volatility."

China's exports fell 5.5% in August from a year earlier in dollar terms after a drop of 8.3% in July, according to data from the General Administration of Customs on Tuesday.

Markets have already priced in expectations that Chinese growth will slow down, said Koen Maes, global head of asset allocation at Candriam Investors Group, which oversees about $100 billion in assets. Fresh data confirming those expectations did not surprise investors, he added.

The data could "give further motivation for policy makers to address domestic demand through pro-growth measures," Credit Suisse strategists wrote in a note, adding that this could be helping market resilience.

Last week's U.S. jobs report failed to give investors a clear indication of whether the Federal Reserve will raise short-term interest rates for the first time in almost 10 years at its meeting Sept. 16-17.

"The U.S. jobs report was inconclusive. There is room for further volatility," said Mr. Ruane of Investec.

In Asia on Tuesday, shares in Hong Kong rose 3.3%. Japan's Nikkei closed 2.4% lower, erasing all of its 2015 gains.

In Europe, Germany's DAX climbed 2.1% and France's CAC-40 advanced 1.9%. The U.K.'s FTSE 100 gained 1.7%.

Shares in U.K. insurer Amlin PLC rose more than 30% after Japan's Mitsui Sumitomo Insurance Company agreed to buy the company for £ 3.47 billion ($5.3 billion).

The euro fell 0.1% against the dollar to trade at around $1.1161.

Brent crude oil gained 2.7% to $48.91 a barrel. Gold lost 0.2% to trade at $1,120.50 a troy ounce.

The yield on 10-year U.S. Treasury bonds rose to 2.154% as prices fell.

Write to Chiara Albanese at chiara.albanese@wsj.com

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(END) Dow Jones Newswires

September 08, 2015 08:15 ET (12:15 GMT)

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