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European shares highest in more than 8 months on Moderna vaccine optimism

"The more companies that can develop a vaccine candidate that can be shown to be effective, the more optimistic investors will be about being able to see a way out of this pandemic and for economic activity, sort of come back to some semblance of normality," said Michael Hewson, chief market analyst at CMC Markets. European banks were the best performing sector, adding 4.7%.

Reuters | Updated: 16-11-2020 18:45 IST | Created: 16-11-2020 18:45 IST
European shares highest in more than 8 months on Moderna vaccine optimism

European shares shot up to a more-than-eight-month high on Monday, after Moderna Inc became the second drugmaker in a week to report high efficacy for an experimental coronavirus vaccine.

The pan-European STOXX 600 traded 1.5% higher by 1219 GMT after Moderna announced that its vaccine appeared to be highly effective. Pfizer made a similar announcement on Nov. 9. "The more companies that can develop a vaccine candidate that can be shown to be effective, the more optimistic investors will be about being able to see a way out of this pandemic and for economic activity, sort of come back to some semblance of normality," said Michael Hewson, chief market analyst at CMC Markets.

European banks were the best performing sector, adding 4.7%. Spain's BBVA topped the sector after PNC Financial Services Group said it would buy its U.S. business for $11.6 billion in cash. European Central Bank Vice President Luis de Guindos asked Euro zone banks on Monday to keep using their capital buffers to absorb losses without holding back credit to the real economy, which, he said, needs time to rebound from a pandemic-induced recession.

CMC's Hewson also noted an air of caution over a post-COVID recovery, saying economic activity would not return to pre-pandemic levels overnight. Shares of Germany's BioNtech, which is developing the other vaccine with Pfizer, fell more than 5% after Moderna's report.

Data showing that China's factory output rose faster than expected in October and that retail sales surged had helped sentiment earlier in the day. The benchmark STOXX 600 has gained nearly 40% from its March lows, although it has underperformed its U.S. peers this year. A spike in coronavirus cases across Europe has resulted in renewed, economically disruptive lockdown measures.

But overall quarterly results for STOXX 600 companies have been better than expected, with 68% of those that have reported results so far beating earnings estimates, according to Refinitiv data. In company news, Vodafone Group gained 4.6% after it said it was increasingly confident about its full-year performance following a "resilient" first-half, despite underlying momentum being obscured by the impact of COVID-19.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


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