LONDON (Reuters) – British shares lagged Europe on Wednesday after Prime Minister Theresa May’s resounding defeat in a parliamentary vote on her Brexit deal, but in the face of unrelenting political uncertainty investors shifted their focus to results and M&A news.

A defeat had largely been priced in already, though the magnitude of the loss – a margin of 230 – came as a surprise.

Analysts and investors interpreted the outcome as a positive for the market, making a “softer, later” Brexit more likely, but uncertainty ahead of a no confidence vote in May’s government on Wednesday evening kept trading muted.

“There’s still quite a lot of uncertainty…a hard exit is a lower probability risk than it was but I don’t think we can completely discount it,” said Caroline Simmons, deputy head of the UK investment office for UBS Global Wealth Management.

The FTSE 100 .FTSE was down 0.6 percent by 0930 GMT while euro zone stocks .STOXXE held flat and Germany’s DAX .GDAXI edged down 0.2 percent.

The top British index was dragged down by multinational exporter stocks like Unilever (ULVR.L) and Diageo (DGE.L), which make the lion’s share of their earnings in foreign currencies and are bruised by sterling rising.

Bank shares .SX7P were the biggest boost to European indexes, up 0.9 percent as investors bet that a disruptive no-deal Brexit was less likely after the parliamentary vote.

BNP Paribas (BNPP.PA), AXA (AXAF.PA) and Intesa Sanpaolo (ISP.MI) were the top three boosts to Europe’s STOXX 600 , but the gains remained unconvincing with the endgame to Brexit still clear as mud.

“Unfortunately, everything remains possible: new elections, an extension of the deadline for Article 50, or even a second referendum,” said Stefan Kreuzkamp, chief investment officer at DWS.

Italian banks rallied, led by Unicredit (CRDI.MI), having slumped in the previous session on fears the European Central Bank may require full coverage of non-performing loans by 2026.

They helped Italy’s FTSE MIB .FTMIB rise 0.5 percent, outperforming peers, after Unicredit said it considers its non-performing exposure (NPE) coverage “fully adequate”.

The Brexit vote defeat drove UK domestic stocks up as investors grew more optimistic about the prospects for sectors seen as highly vulnerable to a no-deal Brexit.

UK housebuilders Persimmon (PSN.L), Taylor Wimpey (TW.L), Barratt Developments (BDEV.L), and Berkeley Group (BKGH.L) were among the top European gainers, up 2.1 to 3 percent.

“If you look at domestic UK stocks, some of their valuations have been pushed back to blood-on-the-street type valuations,” said Dominic Wallington, head of European equity at RBC Global Asset Management.

“There’s real insurance in some of these valuations, that I think is remarkable.”

Overall Britain’s FTSE 100 is trading at a much lower valuation than peers.

Elsewhere in Europe results and dealmaking news drove moves with stocks shrugging off the night’s political developments.

Danish freight company DSV (DSV.CO) climbed 4 percent after it made a bid for Swiss logistics company Panalpina (PWTN.S) valuing the company at $4.1 billion.

Panalpina shares soared 27.7 percent after the bid which, at 170 Swiss francs per share, represents a 24 percent premium to the stock’s closing price on Tuesday.

“We can see the strategic logic for DSV, as the deal would give them a large opportunity to scale their process and IT capabilities. But a deal of this magnitude will not be without risk,” wrote Bernstein transport analyst Daniel Roeska.

Pearson (PSON.L) shares tumbled 5.3 percent, the biggest European fallers, after the British education publisher said it expects one-off restructuring costs to rise to around 330 million pounds, ahead of its original 300 million pound plan.

Norwegian aluminium maker Norsk Hydro (NHY.OL) rose 4.9 percent after it said Brazil’s northern state of Para lifted a production embargo on its Alunorte alumina refinery.

(For a graphic on valuations, click: tmsnrt.rs/2AQVGMG)

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