Europe: Shares rebound from Omicron-spurred rout

[BENGALURU] European shares posted their best session in almost six months on Wednesday, as investors picked up beaten down stocks that were hammered in the past few sessions by fears of the spread of a new and highly infectious strain of the coronavirus.

The pan-European Stoxx 600 rose 1.7 per cent, recovering from a sharp sell-off in the previous session that had sent it to a seven-week low. The index ended November with a 2.6 per cent drop and is 4 per cent away from the record high it hit in the middle of last month.

"Europe was already imposing lockdowns before Omicron. Since valuations are still elevated, earnings need to do the heavy lifting from here; that task has now become harder in the EU .... relative to the US," TS Lombard research head Andrea Cicione said.

A recent Reuters poll of strategists and brokers suggests that European stocks may hit record highs in 2022, boosted by a recovery in corporate profits.

The poll also says that Germany's DAX and France's CAC 40 indexes would hit uncharted peaks by mid-2022, while the Stoxx 600 would gain 7 per cent and reach 500 points by July.

"In the short term, uncertainty and therefore market volatility will continue until we get greater clarity on the resistance to vaccines and the lethality and transmissibility of Omicron," TS Lombard's Cicione said.

Industrial stocks were the biggest boost to the Stoxx 600 on Wednesday. Among sectors, autos as well as travel and leisure rose 3.8 per cent and 3.1 per cent, respectively.

Miners gained 2.3 per cent after copper prices rebounded on easing concerns about the Omicron coronavirus variant, while oil stocks jumped 2.1 per cent as crude prices rose as Opec meets.

The European Union could greenlight Covid-19 vaccines tailored to target the new variant in three to four months, the region's drug regulator chief Emer Cooke said on Tuesday, adding that existing shots would continue to provide protection.

A survey showed manufacturing growth in the euro zone accelerated slightly last month, but supply chain bottlenecks worsened.

Among individual stocks, Husqvarna, the world's biggest maker of power gardening tools, jumped 5.4 per cent after raising its overall financial targets and growth ambitions for robotic lawn mowers and other battery-powered products.

Italy's Banca Monte dei Paschi di Siena surged 16.7 per cent after saying it had begun a dialogue with the Ministry of Economy and Finance to restart discussions on its plans to raise capital.

Battered German property group Adler's shares surged 34.5 per cent, pulling up from all-time lows, after announcing divestitures.

REUTERS