Europe: Brexit, vaccine optimism buoy shares; FTSE 100 lags on new pandemic curbs

[BENGALURU] European shares rose on Tuesday, after the European Union moved up the date to approve a Covid-19 vaccine, while London's blue-chips lost as stricter Covid-19 restrictions tied in with a higher pound on Brexit trade deal hopes.

London's FTSE 100 lost 0.3 per cent as the pound gained on a report that British and European Union negotiators may be closing in on a deal.

Meanwhile, London moved into England's highest tier of Covid-19 restrictions, with a new variant of the coronavirus likely causing increased infection rates. This comes as data showed existing curbs caused Britain's jobless rate to rise in October.

"Tier 3 lockdown measures being implemented in London will deal yet another blow for the UK retailers, with festive shopping likely to shift online," said Joshua Mahony, senior market analyst at IG.

The EU said on Tuesday it was on course to approve its first Covid-19 vaccine before Christmas after its drug regulator brought forward a deadline for review following the start of immunisation campaigns in the United States and Britain.

This helped investors look past new curbs in Germany and Italy as well and pushed the pan-European Stoxx 600 index up 0.3 per cent, while Germany's DAX jumped 1 per cent for its best day in three weeks.

Volkswagen led gains on the index, up 7.6 per cent, after its supervisory board said chief executive Herbert Diess had its full support as he leads a new team, averting a leadership crisis. This sent Europe's auto sector up 3 per cent.

The basic material sector rose 2.1 per cent with ArcelorMittal surging following an upgrade from Societe Generale, while Umicore rose after raising its annual guidance.

Investors also await the outcome of the US Federal Reserve's two-day meeting set to begin on Tuesday as Washington struggles to pass a fiscal stimulus.

Among other stocks, H&M shares dropped almost 3 per cent after the world's second-biggest fashion retailer said local-currency sales fell 10 per cent in its fourth quarter, with a big slowdown in the final month due to the pandemic.

But retail sector losses were tempered by a 3 per cent jump in JD Sports after the sportswear retailer said it bought US retailer Shoe Palace for US$325 million.

REUTERS