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(Reuters) – European shares rose on Monday on hopes of a post-coronavirus global recovery, with investors relieved that the U.S. response to China’s national security law in Hong Kong was not as bad as feared.
The pan-European STOXX 600 index (STOXX) rose 0.6%, hovering near its strongest level since March 9, led by gains in banks (SX7P), miners (SXPP) and travel & leisure stocks (SXTP).
U.S. President Donald Trump began the process of ending special treatment for Hong Kong to punish China, but did not mention actions that could undermine the U.S.-China Phase One trade deal.
“The markets are focused on the bigger global picture and a slightly calmer tone on the U.S.-China front,” said Keith Temperton, a trader at Tavira Securities.
“However, things are definitely in the pipeline regarding the Hong Kong situation. The more of this goes on, there will be a reaction and markets will be caught by surprise.”
Global markets kicked off June on a strong note, with the STOXX 600 recovering nearly 31% since March lows as hopes of COVID-19 vaccine, easing lockdowns and expectations of more stimulus helped improve risk appetite.
The European Central Bank will meet on Thursday and investors expect policymakers to ramp up the bond-buying program.
Meanwhile, business activity surveys showed Germany’s manufacturing sector continued to contract in May, even as a slump in factory activity in France and Spain eased.
Among individual stocks, Italy’s Mediobanca (MI:MDBI) jumped 9.4% after billionaire Leonardo Del Vecchio confirmed he had asked for green light from the European Central Bank to increase his stake in the company.
Spain’s MasMovil (MC:MAS) surged more than 21% as buyout funds KKR (N:KKR), Cinven and Providence mounted a friendly bid to pay up to 2.96 billion euros ($3.30 billion) for the telecom operator.
Primark-owner Associated British Foods (L:ABF) gained 6.4% as it announced it was working to re-open all its 153 stores in England on June 15.
UK fashion brand Ted Baker (L:TED) slumped 11.3% as it rolled out plans to raise 95 million pounds ($117.84 million) through a stock issue to help it ride out the challenges posed by the coronavirus.
Markets in Germany, Switzerland, Denmark and Norway are closed for Whit Monday holidays.
