Sunday, 25 Oct 2020

Dealmaking, Trump's health update boost European stocks

(Reuters) – European stocks gained on Monday, lifted by dealmaking activity and an upbeat global mood following positive updates of U.S. President Donald Trump’s health.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 2, 2020. REUTERS/Staff

The pan-European STOXX 600 index .STOXX was up 0.6%, adding to last week’s near-2% gain. Sectors considered more economically sensitive such as oil and gas .SXEP, travel and leisure .SXTP, banks .SX7P, and automakers .SXAP climbed.

That was despite a 27.3% plunge in Cineworld CINE.L after the world’s second-biggest cinema chain said it would close all of its UK and U.S. movie theatres later this week, leaving as many as 45,000 workers unemployed.

Oil majors Royal Dutch Shell RDSa.L, BP BP.L and Total TOTF.PA rose nearly 2%, with crude prices climbing after an easing of the worst fears about Trump’s health condition and an expanding workers’ strike in Norway, Western Europe’s largest oil producer. [O/R]

Trump’s doctors treating him for COVID-19 have said his health is improving and he could be sent back to the White House as soon as Monday, although outside experts warn that his case may be severe.

“If he is recovering relatively well, that means stability because if it turns out that Trump gets ill and might not be able to run any campaign, that creates a lot of questions,” said Teeuwe Mevissen, a senior macro strategist at Rabobank.

“But there are many other uncertainties hanging above markets,” Mevissen said, pointing to a second wave of COVID-19 cases in Europe, Brexit risks and U.S.-China trade tensions.

A survey showed the euro zone’s economic recovery faltered in September as the reimposition of some coronavirus curbs sent the bloc’s dominant service sector into reverse.

IHS Markit’s final composite Purchasing Managers’ Index fell to 50.4 in September from August’s 51.9, close to the 50-mark separating growth from contraction.

Madrid-listed stocks .IBEX outperformed with a gain of 1.1% on reports of consolidation in the banking sector.

Unicaja UNI.MC jumped 10.7% after it confirmed reports that it was in preliminary talks for a potential merger with its peer Liberbank LBK.MC, which surged 15%.

Sabadell SABE.MC rose 3.5% after a local newspaper reported that it had held contacts with rivals BBVA BBVA.MC and Kutxabank to evaluate a potential merger.

Meanwhile, Dufry DUFN.S surged 17.7% after it revealed that China’s Alibaba BABA.N planned to acquire a stake of up to 9.99% in the Swiss duty free group.

UK’s Weir Group Plc WEIR.L rose 15.5% to the top of STOXX 600 .STOXX after it agreed to sell its oil and gas division to U.S. heavy equipment maker Caterpillar CAT.N for $405 million.

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