Off The Wire
European stocks rally, FTSE jumps 1.3% ahead of budget
(Reuters) - European stocks rose for a third straight session on Wednesday on hopes of a rebound in economic growth as Germany looked set to relax its coronavirus curbs, while investors awaited details on UK’s new budget.
The pan-European STOXX 600 index rose 0.8%, while the German DAX gained 1% to hit a record high, France’s CAC 40 was up 0.9% and UK’s FTSE 100 added 1.3%.
All eyes will be on UK finance minister Rishi Sunak’s budget speech, due to begin at around 1230 GMT. The plan includes a five-month extension of a huge jobs rescue plan, to steer the economy through what he hopes will be the final months of COVID restrictions.
Hotel operator Whitbread, catering firm Compass Group and British Airways-owner IAG were among the top gainers on the FTSE 100, with banks providing the biggest boost.
Helping sentiment, German Chancellor Angela Merkel is expected to agree to a gradual relaxation of coronavirus curbs with regional leaders, but the rules can be tightened again if infections rise, according to draft plans seen by Reuters.
“Markets in Europe have generally been driven by cyclical and value sectors - banks, autos etc,” said Thomas Dorner, investment director at Aberdeen Standard Investments.
“The market is anticipating that the worst impact of COVID-19 and lockdowns is over, and we are looking forward to the benefit of vaccines and a wider reopening of the economy.”
Economically sensitive sectors such as automakers, banks as well as travel and leisure stocks were the top gainers in Europe.
Stellantis, the world’s fourth-largest carmaker, gained 2.1% after saying it was aiming for a margin on its adjusted operating profit of 5.5%-7.5% this year as the auto industry is expected to grow in 2021.
Renault and Volkswagen jumped almost 5%.
Meanwhile, a survey showed the euro zone economy is almost certainly in a double-dip recession as lockdowns continue to hammer the services industry, but hopes for a wider vaccine rollout drove optimism to a three-year peak.
Swiss logistics group Kuehne & Nagel International rose 4.7% as it marked a new record for full-year operating profit.
UK insurer Hiscox Ltd tumbled 12.2% to the bottom of STOXX 600 as it swung to a huge loss for 2020 and continued to withhold its dividend.
Reporting by Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu and Anil D’Silva