European shares rebound as U.S. stimulus overshadows virus worries
(Reuters) – European shares rose on Tuesday as the approval of a U.S. stimulus package helped allay worries of a further dent to the global economy from a new coronavirus strain in the UK.
The pan-European STOXX 600 index rose 1%, recovering from a more than 2% slide in the previous session, which was also its biggest one-day drop in nearly two months.
The U.S. Congress on Monday approved an $892 billion fiscal stimulus following days of furious negotiation. President Donald trump is expected to sign it into law, keeping hopes of an economic recovery alive.
Strict lockdowns went into effect in Britain on Monday to curb the spread of the new coronavirus strain said to be up to 70% more transmissible than the original, triggering border bans and travel restrictions from several countries.
The BBC reported that Britain and France would announce a deal to restart freight by Wednesday.
Record growth in UK GDP, however, saw London’s blue-chip index reverse early losses to trade 0.3% higher, held back only by materials and energy stocks, which tracked declining prices of underlying commodities. [O/R][MET/L][.L]
“The GDP reading … has shielded the markets slightly,” said Connor Campbell, a financial analyst at Spreadex.
“You’ve still got the COVID travel ban. That is really weighing on the UK markets and preventing them from doing much this morning. I think perhaps they could have been lower if that GDP figure hadn’t been revised higher.”
Banks led the rebound in Europe, followed by retailers and tech stocks.
U.S. stocks cut losses overnight on stimulus news and, while Dow Jones futures traded flat, S&P and Nasdaq futures pointed to a higher open, signalling European shares could hold on to their gains on cautiously upbeat sentiment. [.N]
AstraZeneca lost 1.4% after its experimental asthma drug developed with U.S partner Amgen failed to meet the main goal of a late-stage trial.
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