Pandemic anxieties fail to halt advance of European values

European shares closed higher on Tuesday, taking heart from strong Wall Street gains, even as Omicron worries persisted with France tightening curbs and Covid-19 cases surging in Spain and Britain.

The pan-European Stoxx 600 rose 0.6 per cent to end the session at a five-week high.

Risk appetite remains strong into the year end, according to analysts, despite the threat of the Omicron coronavirus variant hampering a global economy already tackling slowing growth, supply bottlenecks and soaring prices.

The Stoxx 600 is eyeing its best month since March this year, adding 5.5 per cent in December so far, and is on track to gain about 22.4 per cent in 2021 after falling 4 per cent in 2020.

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Measures

“Given rich valuations after an enthused, if not euphoric, bull run in 2021, it is not unreasonable to propose that this Santa rally is clearing a higher bar,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank.

Most equity markets in Europe gained, with Spain's Ibex and Germany's Dax leading the way with gains of about 0.8 per cent. In France, the blue-chip Cac 40 rose 0.4 per cent after the French government said it would tighten measures, though there will be no curfew for New Year's Eve.

Stock markets in London and Dublin were closed.

Shares of Italy’s Alerion Clean Energy advanced 4.1 per cent on reports its controlling family could sell a stake of up to 43 per cent in the renewable energy operator in a deal worth about €800 million.

Swiss speciality chemicals maker Clariant said it would purchase assets from German competitor BASF in north America in a $60 million deal that will help expand its sustainable business. BASF and Clariant shares rose 0.7 per cent and 0.5 per cent respectively.

Spanish telecom group Telefonica rose 0.8 per cent after it reached an agreement with labour unions to cut about 2,700 jobs in early 2022.

Trading

On Wall Street, the S&P 500 hit a record high in the first hours of trading on Tuesday as conviction in the US economy helped investors shrug off concerns over Omicron-driven travel disruptions and store closures, following a four-day rally for US stocks amid thin trading volumes.

Boeing added 1.4 per cent as Indonesia lifted a ban on the company's 737 Max, three years after the crash of one of its aircraft that led to the loss of all 189 people aboard.

Markets are in one of the seasonally strong periods, also called the Santa Claus rally, with CFRA Research data showing the S&P 500 has on average risen 1.3 per cent in the last five trading days of the year and first two days of the new year since 1969. – Reuters