Spanish stimulus helps European stocks end seesaw session higher

European shares rose on Tuesday, coming off a near seven-year low helped by stocks in Spain, which announced a bumper stimulus plan to combat the economic shock of the coronavirus. The pan-European STOXX 600 index closed up 2.3% after seesawing earlier in the day, following a dramatic sell-off on Monday.

It was buoyed by Spain's Ibex 35 which rose about 6.4%, marking its best day since 2010 as investors lapped up a 200-billion-euro ($219.6 billion) package of measures unveiled by Spanish Prime Minister Pedro Sanchez. The plan soothed markets that have been blindsided by widespread shutdowns and disruptions in the wake of the virus outbreak, with poorly received central bank measures and tumbling oil prices adding to the pain.

"It was, in a way, what investors had been waiting for. Last week was about central bank action, which is perhaps a prerequisite, but not a solution," said Elwin de Groot, head of Macro Strategy at Rabobank in Amsterdam. "What this does underscore is that markets want to see firm action, and this is an example of that. I think it's positive that we're seeing the first steps in really massive measures."

Telecoms and utilities were the best-performing European sub-sectors for the day, climbing more than 10% and 5%, respectively, as uncertainty over the pandemic kept defensive stocks in play. Belgium's Proximus NV topped the telecoms sector, rising about 21% after it extended a cloud-storage partnership.

The stock also topped the STOXX 600. However, travel and leisure stocks, the worst affected by the outbreak, dropped about 5%. The sector has declined for 18 of the 19 previous sessions, and is set to lose more than half of its value in the first quarter of 2020.

Airbus tumbled 8.6% after saying it would stop production and assembly activities at its plants in France and Spain for the next four days in order to comply with government containment measures. British theatre operator Cineworld Group plummeted 43% to the bottom of the STOXX 600, while restaurant operator SSP Group dropped 33% after Britain advised people against pursuing social activities to curb the spread of the virus.

French stocks ended 2.8% higher after President Emmanuel Macron sought to reassure businesses by offering more fiscal aid. Frankfurt shares shrugged off a weaker-than-expected business sentiment reading and closed about 2.3% higher.

($1 = 0.9107 euros)

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