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Europe: Shares climb to five-month peak after no-deal Brexit rejected

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[LONDON] European shares rose to a five-month high on Thursday, boosted by strength in the banking sector after Britain's parliament voted to reject a disorderly Brexit.

Sentiment improved from cautious to upbeat after the open, ahead of another vote on Thursday evening that could delay Britain's planned departure from the European Union.

The pan-European STOXX 600 ended up 0.7 per cent, while British blue chips rose 0.5 per cent.

"We now see a 60 per cent chance (up from 55 per cent) that a close variant of the prime minister's current Brexit deal is eventually ratified," Goldman Sachs analysts wrote. The probability of a no-deal Brexit was now 5 per cent, they said.

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Leonardo scored its best day in more than 7 years, up 13 per cent, recouping some of its steep losses since January 2018, after the Italian defence group said net profit surged and it saw sales rising in 2019.

Germany's GEA rose 11 per cent after its CEO said it will announce changes to its structure in June, while France's Lagardere gained 8 per cent after giving more details about its divestment plans.

Among the fallers, Lufthansa posted the worst performance after reporting an 11 per cent decline in fourth-quarter operating profits. Its shares fell 6.3 per cent.

RWE slipped in early trade after it forecast core earnings might fall by one-fifth this year, but managed to progressively recover to end up 1.8 per cent. Analysts at UBS affirmed their buy rating on the stock, saying the disappointing guidance is mostly due to one-off and temporary effects.

Italy's top insurer, Assicurazioni Generali, rose 1.2 per cent as it raised its dividend for 2018 after beating its business plan targets.

Banks rose 0.9 per cent.

"The European bank index is responding positively to the turn in the European surprise index," said Russell Quelch, financials specialist sales at Redburn.

"The ECB's assertion last week of the deterioration in the growth outlook for Europe therefore looks increasingly at risk of being behind the curve," he added.

Trade-sensitive autos ended flat after a Bloomberg report said China and the United States are likely to push back a meeting between Presidents Donald Trump and Xi Jinping to end a prolonged spat over trade to April at the earliest.

Mr Trump later said he was in no rush to complete a trade pact with China.

REUTERS