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Europe close: Cyclicals jump at the start of the month, miners and banks in focus

By Alexander Bueso

Date: Tuesday 01 Dec 2020

Europe close: Cyclicals jump at the start of the month, miners and banks in focus

(Sharecast News) - European shares moved into the final stretch of the year with solid gains, driven by optimism over a coronavirus vaccine and positive data out of China.
The pan-European STOXX 600 index was up 0.65% at 391.9, after a record-breaking run in November. London's FTSE 100 rose 1.89% to 6,384.73, while the German DAX was up 0.69% at 13,382.30.

France's CAC 40 meanwhile climbed 1.14% to 5,581.64, although gains on the Milan bourse were restrained, with the FTSE Mibtel tacking on 0.18% to 22,099.92.

News that Moderna's Covid-19 vaccine was 94% effective helped to drive markets upwards. Its treatment along with that of Pfizer/BioNTech are expected to be given emergency use authorisation in the UK, US and elsewhere this month.

Chinese factory activity accelerated at the fastest pace in a decade in November, according to a private sector survey that showed the economy was returning to pre-pandemic levels.

The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 54.9 from October's 53.6, marking the highest level since November 2010.

By sectors, the news out of China saw the Stoxx 600 sector gauge for Basic Resources jump to the top of the leaderboard with a gain of 3.23%.

Lenders' shares were close behind, adding 3.03% as a group, as analysts at Citi predicted that "several" European regulators would partially ease their restrictions on capital returns in mid-December.

However, sentiment was slightly tempered by Brexit talks, where the UK was digging its heels over the symbolic issue of fishing rights, despite the industry making up a small share of the domestic economy.

In equity news, Bank of Ireland topped the gainers, with shares up 10%. Barclays and Lloyds were also sharply higher.

French real estate investment company Covivio rose almost 7%.

Royal Mail shares were up over 5% on an upgrade to 'hold' from 'sell' by Liberum.

UniCredit shares slipped sharply again, down 8%, as CEO Jean Pierre Mustier stepped down, with sources citing a rift with the board over strategy for the sudden departure.

"This is a huge blow to the bank, and in particular raises concerns over its governance and decision making processes. There has been speculation that the Italian government were trying to get Unicredit to buy Monte Dei Paschi, a bank that has been in trouble for years now, and whose balance sheet problems are a huge unknown," said Markets.com analyst Michael Hewson.

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