European shares rise on hopes of more U.S. stimulus

European shares rose on Wednesday, as signs of more U.S. stimulus and hopes that the global economy can bounce back from an appalling April offset fears of further lockdowns due to a new outbreak in China. The pan-European STOXX 600 index rose 0.7%, after logging its best day in nearly one month in the previous session on the U.S. Federal Reserve's plan to start buying corporate bonds and a report the Trump administration was preparing a nearly $1 trillion infrastructure proposal.

European shares rose on Wednesday, as signs of more U.S. stimulus and hopes that the global economy can bounce back from an appalling April offset fears of further lockdowns due to a new outbreak in China.

The pan-European STOXX 600 index rose 0.7%, after logging its best day in nearly one month in the previous session on the U.S. Federal Reserve's plan to start buying corporate bonds and a report the Trump administration was preparing a nearly $1 trillion infrastructure proposal. European equity markets have roared back since a coronavirus-fuelled crash in March, aided by massive global stimulus, with the STOXX 600 index now only about 16% below its February record high.

"It just speaks to evidence that a global recovery seems to be at play, given that European equities seemed to have underperformed U.S. equities recently," said Seema Shah, chief strategist at Principal Global Investors in London. "What everyone is hoping for is that you get a return to growth which is driven by more confident consumer behaviour but if you have another outbreak, even if there is no lockdown, it starts to weigh on people's minds about the virus."

Beijing cancelled scores of domestic flights on Wednesday, ramping up attempts to contain a coronavirus outbreak that has triggered fears of renewed wider contagion. Banks, real-estate and retail stocks led the charge among European sector indexes.

Lufthansa rose 3.5% after German investor Heinz Hermann Thiele raised his stake in the company to more than 15% from 10%, he told newspaper Frankfurter Allgemeine Zeitung in an interview. Boohoo gained 8.7% after the British online fashion group forecast annual results to be ahead of market expectations on increasing demand during coronavirus lockdowns.

Dutch postal and parcel services provider PostNL jumped 15% as it sees its full-year normalised operating profit "strongly" above the previous guidance. Healthcare stocks also remained in focus after trial results on Tuesday showed that a cheap and widely used steroid called dexamethasone became the first drug shown to be able to save the lives of COVID-19 patients.

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