Stocks look poised for a strong rebound, as aggressive bargain-hunting marks European trading this morning. All across Europe stocks are bouncing back today. Stocks that have been seriously thrashed recently leading the way. Names such as DaimlerChrysler AG, British Airways plc and Axa SA are up.

The expectation of further rate cuts in Europe is helping too. And the Swiss central bank cut rates earlier today, solidifying that expectation. The FTSE is up 10 points to 4540. The CAC 40 has gained 130 points to 3783. The market which fell hardest, the DAX, is bouncing highest. It is up 165 points to 3952.

Overnight in Asia, the Japanese market was closed for a holiday, but that didn’t stop the Bank of Japan from selling the yen to subdue its strength against the dollar. The other big Asia market rose impressively. The Hang Seng closed up 350 points to 9285.

The strength in some beaten up airlines is not to say that airlines aren’t still suffering. Swissair Group says it is cutting 3,000 jobs, ground 25% of its long-haul fleet, and is asking the Swiss government for help.

In M&A news, Deutsche Bank AG is buying Scudder from Zurich Financial Services AG for about US$2.5 billion to double its U.S. fund business.

In other business news, JDS Uniphase Corporation announced its sales outlook for the current quarter. It anticipates sales for its first quarter ending September 29, will be approximately $325 million. It notes that it has cut it workforce by more than half to 14,000 from a high of 29,000 in early 2001.

On the economic front, foreign investors reduced their holdings of Canadian securities by $5.1 billion in July, their largest monthly reduction of the year. Foreign investors reduced their holdings of Canadian stocks by $3.9 billion in July, largely reversing an increase of a similar size in June.

Also, Canadian investors stopped buying foreign stocks in July, with buying slowing sharply to $0.2 billion in July, after buying $26.3 billion over the first six months of the year. Canadians sold $0.2 billion of U.S. equities and bought $0.4 billion worth of overseas equities. Offsetting this was a divestment of $0.5 billion worth of foreign bonds by Canadians. The reduction in foreign bonds was spread between U.S. treasuries and U.S. corporate bonds.