Spectre of more virus restrictions keeps lid on European markets

European shares ended flat on Monday as Germany’s warning of tighter lockdown restrictions overshadowed gains from telecoms sector dealmaking.

In the US, the S&P 500 hit a record high after US president Joe Biden picked Federal Reserve chair Jerome Powell to lead the central bank for a second term, with Wall Street lenders rallying on the prospect of interest rate hikes.

Dublin

The Iseq fell just over one-third of 1 per cent, despite two of its biggest stocks, AIB and Bank of Ireland, performing strongly on the back of a wave of positive sentiment in the banking sector. AIB closed up 1.8 per cent to €2.19, while BOI was ahead by 2 per cent to €5.07.

Travel related stocks fell sharply as it became clearer that Covid restrictions will deepen across Europe this winter. Ryanair was down almost 3 per cent to €15.48, while Datalex, which sells software to airlines, was down more than 3.4 per cent to 84 cents.

Austrian Covid lockdown hits European stocks

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London

The FTSE 100 snapped a four-day losing streak driven by gains in heavyweight mining and financial stocks. The blue-chip index closed 0.4 per cent higher, bouncing back from a three-week low hit last week.

London-listed Chilean copper miner Antofagasta jumped 5 per cent to the top of the index after hard-right former congressman Jose Antonio Kast topped the first-round of Chile's presidential election, clearing up political uncertainty.

Other base-metal miners also rose 1.7 per cent, while the rate-sensitive bank share index gained 1.4 per cent to provide the biggest boost to the index.

BT Group and Vodafone rose 2.5 per cent and 3.2 per cent, respectively, in a broad sector rally after US fund KKR proposed to take Italy's Telecom Italia private.

Marks and Spencer added 2 per cent, after a media report that US investment firm Apollo Global Management is mulling a buyout of the retailer.

Europe

The pan-European Stoxx 600 index finished flat after falling earlier in the day when German chancellor Angela Merkel said Europe’s biggest economy needed tighter restrictions to control a wave of Covid-19 inflections.

Telecom stocks rose 1.8 per cent – their best day since March – fuelled by a 30.3 per cent jump in Telecom Italia. KKR reportedly set an indicative price of 50.5 cents for its €11 billion buyout offer – a 45.7 per cent premium to the price on Friday.

Italian mobile tower company Inwit, partly controlled by TIM, gained 4.6 per cent as the KKR approach created speculative appeal for the firm, while TIM's top investor Vivendi rose 2 per cent.

Norway's Telenor climbed 1.5 per cent after agreeing with Charoen Pokphand Group to merge their Thai units in a deal valued at about $8.6 billion.

Sweden's Ericsson slid 5.6 per cent after the mobile telecoms equipment maker agreed to buy cloud communications firm Vonage for $6.2 billion.

Wind turbine maker Vestas skidded 2.5 per cent after saying it was hit by a cyber attack that affected its IT systems and compromised data at the Danish firm.

New York

The S&P 500 banks sector jumped 2.8 per cent, tracking a surge in US Treasury yields as investors priced in policy tightening by the first half of 2022. Wells Fargo led gains among major Wall Street banks, adding 3.7 per cent.

Apple jumped 2.6 per cent to a record high after JP Morgan flagged possible improvements to the supply of the iPhone 13 in coming months.

Tesla gained 3.9 per cent after chief executive Elon Musk tweeted that the Model S Plaid will "probably" be coming to China around March.

Activision Blizzard slipped 2.4 per cent after a media report that the video game publisher's chief executive, Bobby Kotick, would consider leaving if he could not quickly address concerns over company culture.

(Additional reporting: Reuters)