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European Shares Kick of Week on Strong Footing

(Reuters) - European shares bounced on Monday after a Wall Street-led rout in technology stocks kept global sentiment subdued in the previous week, with investors keeping a close watch on COVID-19 vaccine developments.

Australia expects to receive its first batches of a potential COVID-19 vaccine in January after a deal was struck with CSL to manufacture two vaccines, one developed by rival AstraZeneca and Oxford University, and another in CSL’s own labs with the University of Queensland.

AstraZeneca rose 1.6%, with the European healthcare sector index jumping 1.1%.

Sanofi rose 1% after it said a coronavirus vaccine it is developing with Britain’s GlaxoSmithKline was likely to be priced at less than 10 euros.

The STOXX 600 index was 1% higher, with Frankfurt shares leading gains after rising 1.2%.

Autos led sectoral gains in Europe after analysts at JP Morgan said the overall tone for production outlook in the European autos sector was “upbeat”, following its meetings with industry leaders.

Insurers and financial services sub-indexes climbed in early trading, while telecoms rose the least, suggesting a risk-on mood.

The STOXX 600 has remained stuck in a tight range since June, as a euro zone economic recovery appeared to be losing steam.

A batch of middling economic data last week bolstered expectations the ECB would maintain an accommodative stance to support inflation, in line with the U.S. Federal Reserve.

“Liquidity and low interest rates alone cannot be the solution to everything, so it’s essential to see continued improvement in economic data and an end to the pandemic for sustainable upside in risk assets,” said Hussein Sayed, chief market strategist at FXTM.

Data showed German industrial output rose far less than expected in July, suggesting Europe’s largest economy faces a slow return to production levels that preceded the crisis unleashed by the coronavirus pandemic.

“German industry eked out a meagre increase in production in July, leaving output still well below its pre-crisis level. Production is likely to have increased again in August, but we now seem to be past the period of rapid catch-up growth,” said Jack Allen-Reynolds, senior Europe economist at Capital Economics.

European banks turned flat following a strong opening, after a rally last week on M&A negotiations between Bankia and Caixabank.

Dechra jumped 9%, to the top of STOXX 600, after its profit beat expectations.

U.S. markets are closed on Monday for the Labor Day holiday.

Reporting by Shreyashi Sanyal in Bengaluru; Editing by Subhranshu Sahu and Shounak Dasgupta

Source: Reuters

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