European shares rebound as progress on Brexit trade deal overshadows virus worries

EU-UK rift over fishing narrows as deadline for deal approaches

An Iraqi investor looks at an electronic board showing shares’ information at the Iraqi stock exchange in Baghdad. Photograph:  EPA/Ahmed Jalil

An Iraqi investor looks at an electronic board showing shares’ information at the Iraqi stock exchange in Baghdad. Photograph: EPA/Ahmed Jalil

 

European shares posted their best day in six weeks on Tuesday, rebounding from a sharp sell-off as optimism around Brexit and US stimulus helped to allay worries of a further hit to the global economy from a new coronavirus variant in Britain.

The pan-European Stoxx 600 index finished up 1.2 per cent on broad-based gains, recovering from a more than 2 per cent slide in the previous session, which was also its biggest one-day drop in nearly two months.

The EU is giving a “final push” in a bid to strike a Brexit trade deal with Britain, its chief negotiator Michel Barnier said on Tuesday, with the two sides inching towards agreement on fishing – a major sticking point.

“[The progress in fishing] highlights the willingness to move towards something that will eventually break the current deadlock,” said Joshua Mahony, senior market analyst at online trading platform IG.

DUBLIN

Fuel station operator Applegreen rose 2.7 per cent after agreeing to be acquired by a consortium led by B&J Holdings and US investment giant Blackstone in a deal that valued it at around €718 million. The move to take Applegreen private comes as the business grapples with Covid-19, Brexit and an accelerating shift by motorists towards electric vehicles.

Swiss-Irish food group Aryzta rose marginally to 62 cent as US investment firm Elliott confirmed its takeover offer for the group had now “lapsed”. Aryzta on Friday rejected a €735 million offer from Elliott, saying it preferred to proceed alone.

Market optimism over Brexit propelled European banks to higher values and Bank of Ireland was no exception, rising 2.6 per cent to €3.30. Rival AIB saw a more modest increase, rising 0.25 per cent to €1.68.

Ryanair also recorded a modest increase of 0.3 per cent to €15.60 following an announcement that it will restore its base at Shannon airport for the summer season in 2021.

Irish insulation group Kingspan fell 1.1 per cent to €61.15 after it pulled out of a €2 billion race for Bridgestone’s Firestone Building Products business.

LONDON

UK stocks bounced on Tuesday as fresh hopes of a trade deal with the European Union outweighed fears over a mutated variant of coronavirus that has shut most of the country.

The mid-cap FTSE 250, considered a barometer for Brexit sentiment, added 1.3 per cent as the EU chief negotiator said both sides were inching towards an agreement on fishing, though the politically sensitive matter remains unresolved.

In company news shareholders in DFS Furniture enjoyed the news that online sales soared by more than three-quarters over the 24 weeks to December 13th, to help overall sales rise 19 per cent compared with last year.This offset the falls from closures due to Covid-19 restrictions. Shares closed up 22p, or 10.5 per cent, at 232p.

A long-running battle for telecoms giant Vodafone took a step closer to completion as the company offered to buy out minority investors in Germany’s biggest cable firm Kabel Deutschland for €2.12 billion. The mobile phone giant has been embroiled in a legal spat since it bought a controlling 76.8 per cent stake in the company seven years ago, with investors angry at the price paid in the deal. Shares in Vodafone closed down 0.18 per cent at 121.78p.

Budget airline easyJet said it has agreed a deal with Airbus to defer the delivery of new aircraft due between 2022 to 2024 until 2027 and 2028, as it suffers from the Covid-19 crisis. The company will still buy 22 aircraft as previously planned. Shares closed up 17.8p at 775p.

EUROPE

Technology stocks and Brexit-sensitive banks led the rebound in Europe, while materials stocks lagged as they tracked a decline in underlying commodity prices.

AstraZeneca was the biggest weight on the pan-region index, down 1.5 after its experimental asthma drug developed with US partner Amgen failed to meet the main goal of a late-stage trial.

Euro zone government bond yields dipped, however, with the market lacking direction amid concerns about a new variant of coronavirus and Brexit trade-deal uncertainty.

NEW YORK

The Nasdaq was propped up by Apple following a report that the iPhone-maker was planning car and battery production, while the Dow and the S&P 500 slipped on weak consumer confidence and home sales readings.

Shares of Apple were up 3.8 per cent in early trading after Reuters exclusively reported that the company was moving forward with self-driving car technology, and was targeting 2024 to produce a passenger vehicle that could include its own breakthrough battery technology.

US home sales fell more than expected in November, while consumer confidence unexpectedly declined this month following a spike in US infections and deaths. The data added to concerns of further economic disruption from a new coronavirus variant raging in Britain that has pushed the country into effective Covid-19 quarantine.

Meanwhile investors digested the passing of a much-awaited $892 billion relief bill which is set to inject fresh liquidity into the US economy.

“While the virus news continues to overshadow from time to time, the market is probably going to resume its upward trend, and that’s probably because relief is coming for the economy,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. – Additional reporting: Reuters