Europe: Shares slip as jump in virus cases offsets vaccine hopes

[BENGALURU] European shares closed lower on Monday as investors weighed signs of progress in developing a Covid-19 vaccine against the threat of economic damage from sweeping business restrictions to contain a surge in infections.

Boosting global equity markets earlier on Monday, AstraZeneca Plc said its Covid-19 vaccine, developed along with the University of Oxford, could be around 90 per cent effective.

But AstraZeneca's shares fell 3.8 per cent as traders took into account its lower efficacy rate compared with rivals such as Pfizer, which has so far reported the highest efficacy rate of 95 per cent, followed by Moderna's 94.5 per cent.

The pan-European Stoxx 600 index ended down 0.2 per cent after having gained as much as 0.6 per cent in morning trading.

"There is a significant chance of continuing lockdown measures as the second wave isn't under control yet," said Bert Colijn, senior economist for the euro zone at ING.

"That means that some form of lockdown in December will continue to depress economic output before things actually start getting better."

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The benchmark index has gained nearly 40 per cent from its March lows, helped by a flood of stimulus measures, but gains remain capped as data points to a faltering economic recovery from a pandemic-induced recession.

Euro zone business activity contracted sharply in November as new virus restrictions across European countries forced many companies in the bloc's dominant service industry to close temporarily, a survey showed.

Manufacturing activity, however, remained a bright spot as many factories remained open during lockdowns.

"The market seems to be looking through the current expected growth dip and focusing on the synchronous economic recovery next year," analysts at Berenberg said.

British domestic stocks were buoyed by hopes of a swifter economic recovery, after the British government said it was working with Scotland, Wales and Northern Ireland to ease Covid-19 restrictions over Christmas.

That helped the UK's domestically focused mid-cap index gain 0.4 per cent, along with hopes of a post Brexit-trade deal with the European Union.

Among individual stocks, Cineworld, owner of the US Regal cinema chain, surged 20 per cent after securing an additional US$750 million in funding to cushion itself against the impact of the coronavirus as it aims to reopen next year.

French bank Credit Agricole jumped 4.1 per cent after its Italian unit launched an offer to buy Italian bank Credito Valtellinese (Creval).

Germany's HelloFresh fell 3.3 per cent after the company said it bought Factor75, a US provider of fully prepared meals, for up to US$277 million.

REUTERS