European shares extend rally on vaccine cheer, ECB comments – Metro US

European shares extend rally on vaccine cheer, ECB comments

The German share price index DAX graph at the stock
The German share price index DAX graph at the stock exchange in Frankfurt

(Reuters) – European shares rose for a third straight day on Wednesday as optimism around a potential COVID-19 vaccine and encouraging comments from European Central Bank chief Christine Lagarde offset worries of economic damage from surging infections.

The pan-European STOXX 600 <.STOXX> jumped 1%, building on a 6% rally this week as investors bought into utilities <.SX6P> as well as travel-related stocks <.SXTP>, a sector that has widely underperformed this year.

Technology stocks <.SX8P>, which have tracked a surge in their U.S. counterparts since the coronavirus-driven crash in March, gained 2%.

The benchmark STOXX 600 has surged nearly 45% since March, thanks partly to historic global stimulus, but it is still down 6.5% on the year as the resurgence in COVID-19 cases threatens a nascent economic recovery.

By comparison, the U.S. benchmark S&P 500 <.SPX> has risen nearly 10% this year and was propelled to record highs this week after drugmaker Pfizer Inc <PFE.N> said its COVID-19 vaccine was 90% effective.

ECB President Christine Lagarde said the central bank will focus on more emergency bond purchases and cheap loans for banks when it puts together its new stimulus package next month.

Lagarde “gave a clear message that encouraging news about a vaccine would not stop the bank from loosening policy in December,” said Jack Allen-Reynolds, senior Europe economist at Capital Economics.

Spain, which has been among the countries hit hardest by the health crisis, will get its first vaccines in early 2021, while Italy expects to receive an initial 3.4 million shots in January.

Meanwhile, the European third-quarter earnings season has been largely better than expected, with about 68% of the STOXX 600 companies that have reported so far beating estimates, according to Refinitiv data.

E.ON <EONGn.DE>, Germany’s largest energy firm, gained 1% after it said demand had recovered faster than expected from the coronavirus crisis, while maintaining its 2020 forecast.

German auto supplier Continental <CONG.DE> fell 0.8% as it warned of further restructuring expenses in the fourth quarter.

Dutch bank ABN Amro <ABNd.AS> slid 5.6% as it remained cautious despite reporting a much better-than-expected quarterly profit. European banks <.SX7P> rose 0.2%.

Nordea Bank <NDASE.ST> fell 5% after Finnish insurer Sampo <SAMPO.HE> said it had sold 4% of the share capital in the bank in an accelerated bookbuild offering to institutional investors.

Among country indexes, German stocks <.GDAXI> rose 0.4%, while London’s FTSE 100 <.FTSE> and France’s CAC 40 <.FCHI> added 1.4% and 0.5%, respectively.

(Reporting by Shashank Nayar and Shreyashi Sanyal in Bengaluru; Editing by Uttaresh.V, Anil D’Silva and Peter Graff)