Europe: Shares rise ahead of US election, earnings help

[MILAN] European shares rallied on Monday, underpinned by stronger banking stocks, as news that Hillary Clinton would not face charges over her use of emails gave her bid for the White House fresh momentum just before the Nov 8 vote.

The pan-European STOXX 600 closed up 1.5 per cent. Last week the pan-European index made its biggest weekly loss since February on growing uncertainty over the US vote's outcome.

Markets had been positioned for a victory for Democrat Clinton until last week's wobble, and she is seen as offering greater certainty and stability by investors.

She got a fresh boost over Republican rival Donald Trump after the FBI said on Sunday it stood by its earlier finding that no criminal charges were warranted. "With this result being seen as a positive for her chances of winning tomorrow's election, the market has opened with a risk-on tone," Rabobank analysts wrote in a note.

Analysts at Deutsche Bank said a Clinton victory could lift Europe's STOXX index by around 5 per cent, while uncertainty linked to a Trump win could see it fall 5-10 per cent. Several polls gave Mrs Clinton a 3-6 point lead on Monday.

No sector was trading in the red. Banks rose 2.7 per cent, helped by a 4.6 per cent surge in HSBC.

The emerging markets-focused bank had posted a sharp jump in its core capital, bolstering the outlook for near-term dividend payments.

"The key feature of the numbers is the reported CT1 (core tier 1 ratio) of 13.9 per cent and leverage ratio of 5.4 per cent, substantially ahead of expectations and management's target,"said UBS, which rates the stock as "neutral".

Italy's Intesa, France's BNP Paribas and Germany's Deutsche Bank rose between 3.7 per cent and 5.9 per cent. Analysts had said banks would suffer in particular by any policy uncertainty created by a Trump presidency.

Miners also benefitted from the risk-on mood as copper prices rose. Basic resources stocks rose 3 per cent, the biggest percentage riser.

Ryanair, up 5.3 per cent, was another gainer after a well-received earnings update. Europe's largest carrier by passengers lifted its long-term growth forecast by 10 per cent and said it would return an additional 550 million euros to shareholders by February.

The top STOXX gainer was Ferrari, up nearly 7 per cent after Q3 results beat forecasts.

PostNL gained 5.8 per cent, after the Dutch postal company rebuffed a raised takeover offer from Belgian rival Bpost, saying it wished to remain an independent group, as it also delivered strong results.

Among top losers were Zalando, which fell 3.8 per cent following a two-notch downgraded to "sell" from UBS, and precious metals miners Fresnillo and Randgold, which were supported last week as investors sought safe haven assets due to concerns over the US vote's outcome.

REUTERS