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Europe: Stocks rebound as Brexit campaign on hold

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[LONDON] European and Asian stock markets rebounded Friday, with traders signalling that the tragic murder of a pro-Europe lawmaker in Britain could swing the upcoming referendum vote to remain in the EU.

The pound was also firmer after campaigning was suspended following the murder Thursday of Labour MP Jo Cox, one week before the June 23 referendum on Britain's membership of the European Union.

"The suspension of campaigning for the UK EU referendum after the tragic death of Labour MP Jo Cox boosted risk appetite," said Nick Stamenkovic, an analyst at broker RIA Capital Markets.

Following a week of largely heavy falls, stock markets rallied Friday also thanks to eurozone finance ministers agreeing to unlock 7.5 billion euros (S$11.34 billion) in urgently needed cash for Greece, dealers said.

Banking shares in particular were strong, with Barclays finishing up 4.6 per cent in London and Societe Generale surging 6.6 per cent in Paris.

In Milan, Banco Popolare soared nearly 17 per cent higher, pushing the FTSE Mib index to close up 3.5 per cent.

London's benchmark FTSE 100 index as well as Frankfurt's DAX 30 and the CAC 40 in Paris all gained around one per cent by Friday's close.

"Markets have stepped back from the cliff edge. A brighter finish has left European benchmarks only narrowly lower for the week," said Jasper Lawler, market analyst at CMC Markets.

Wall Street stocks however dipped on reports of a crackdown on Apple by China, offsetting rising optimism that Britain will vote to stay in the EU.

The Dow and the S&P both slipped 0.6 per cent in mid-day trading in New York, while the tech-rich Nasdaq Composite dropped one per cent.

With polls recently suggesting that the EU referendum outcome was too close to call, investors had until Thursday been piling into safe haven investments, notably the yen, gold and German government bonds.

Gold, which hit a near two-year high at US$1,315.71 an ounce Thursday, fell back to US$1,287.58 an ounce Friday.

Britain's bitter voting campaign was on hold Friday for a second day as the nation reeled from the death of Ms Cox, a 41-year-old former aid worker.

The advance of European stock markets "can be attributed to diminished fears of a UK exit from the European Union", said Mike van Dulken, head of research at Accendo Markets.

"The assumption is that the tragic event will sway the undecided to vote 'Remain' and possibly even reverse some of the 'Leave' momentum seen in recent polls."

Witnesses told local media that Ms Cox had been repeatedly shot and stabbed.

A 52-year-old man, named by media as local Thomas Mair, was arrested. Described by neighbours as a loner, there were indications that he had extreme right leanings.

Markets won a lift also from Greece receiving the bailout cash late Thursday, which came after thousands of Greeks protested in Athens a day earlier over new cuts imposed by Prime Minister Alexis Tsipras in return for the money.