European shares hovered at eight-month highs on Tuesday on optimism around signs of a breakthrough in developing a Covid-19 vaccine, although concerns about the depth of the economic damage from the pandemic capped gains.

The pan-European Stoxx 600 was up 0.2 per cent by 0804 GMT, after rallying 4 per cent in the previous session, as US drugmaker Pfizer said its Covid-19 vaccine, developed with German partner BioNTech, was more than 90 per cent effective in preventing the infection.

Banking, travel and leisure, and energy stocks were among the biggest gainers in morning trading following gains of more than 7 per cent on Monday.

In company news, German sportswear firm Adidas fell 2.2 per cent even as it said it expects sales to return to growth in China in the fourth quarter. – Reuters