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STOCKS NEWS EUROPE-Put/call ratio shows portfolios hedged

The Euro STOXX 50 put/call ratio, one of Europe's widely-used gauges of investor sentiment, is hovering around 2, signalling that equity investors have strongly hedged their portfolio against a potential market pull-back.

The ratio, which measures the trading volume of 'put' options versus 'call' options on the Euro STOXX 50 has risen to 1.95, data from Thomson Reuters Datastream shows.

A ratio below 1 usually signals bullishness, while a ratio above 1.5 usually signals that investors are turning cautious, buying 'puts' as a hedge for their equity portfolios in case of a market sell-off.

The Euro STOXX 50 Volatility index, known as the VSTOXX, is sending a similar signal on Tuesday. The VSTOXX is up 1 percent, signalling investors' appetite for portfolio protection despite the market's week-long rebound.

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The VSTOXX, based on put and call options on Euro STOXX 50, is used to measure the cost of protecting stock holdings against market corrections as it usually moves in the opposite direction to cash equities.

Reuters Messaging: blaise.robinson.thomsonreuters.com@reuters.net