UK stocks rise after a rough summer, led by Sainsbury's

By Kit Rees and Lionel Laurent LONDON (Reuters) - A forecast-beating quarterly performance from supermarket chain Sainsbury's helped UK shares rebound on Wednesday, with Glencore also recovering from a painful sell-off. It was still the worst quarter for UK and European equities since the euro zone debt crisis in 2011. Signs of an slowdown in China and the prospect of an interest-rate increase in the United States halted a multi-year rally fuelled by cheap central bank cash. "People have been very quick to try and take risk off, but I think one good thing is that it has brought valuations back to a reasonable level," said Atif Latif, director of trading at Guardian Stockbrokers. He added that he thought the next quarter would see an improvement. The FTSE 100 index was up 2.6 percent at 6,061.61 points at its close, in line with the pan-European FTSEurofirst 300 index. Sainsbury's was a standout performer in the UK. The stock rose 13.8 percent in its best one-day gain since 2007 after lifting its full-year profit forecast and raising hopes that the battered food-retail sector could be hitting the bottom. Rival Morrisons was up 6.4 percent and Tesco up 6.9 percent. "Sainsbury's is doing better than even they expected ... This is good news for the UK average basket size spend," Bernstein analysts wrote in a note to clients. Glencore extended its recovery after falling 30 percent on Monday amid fears it was not doing enough to reduce its debt in the face of slumping metals prices. Its shares were up 14.1 percent on Wednesday after the company said it had no solvency issues. "We think the market’s taken it as a crisis of confidence as opposed to anything else," said Guardian Stockbrokers' Latif. The statement by Glencore's management and the defence of their balance sheet did seem to be reassuring, he said. Electrical goods retailer Darty gained 19 percent after French books and music retailer Fnac said it had made a proposal to buy the company in a deal valuing it at 533 million pounds. Worldwide mergers and acquisitions are close to a record and with interest rates still at rock bottom, investors expect takeovers to buoy markets despite extra volatility. (Reporting by Lionel Laurent; Editing by Larry King)