European Stocks Advance as Stimulus Bets Boost Cyclical Sectors

(Bloomberg) -- European stocks rose Monday, buoyed by slowing coronavirus infections globally and by the prospect of fresh stimulus in the U.S., with cyclicals advancing and dealmaking boosting the region’s tech sector.

The Stoxx 600 Index advanced 0.3% by the close in London, led higher by basic resources, energy stocks and the technology sector. Dialog Semiconductor Plc was a standout, with the chipmaker surging 16% after agreeing to a $6 billion takeover by Japan’s Renesas Electronics Corp. Oil majors such as BP Plc benefited from the rising price of the commodity.

Italian equities outperformed as Mario Draghi was poised to form a new Italian government, with shares in the region’s lenders, including Banco BPM SpA and UniCredit SpA, among Europe’s biggest banking gainers.

Dialog Semi, Schaeffler, Electrocomponents: EMEA Equity Movers

European stocks have pulled ahead in February, trading about 5% away from their record high, as worries over volatility related to retail investors have ebbed, while the rollout of coronavirus vaccines across Europe has gathered pace.

However, some investors remain cautious, given many countries still have lockdown restrictions in place. Market players are also focused on President Joe Biden’s efforts in pushing for a huge $1.9 trillion economic stimulus package in the U.S.

“The concern is that, despite the optimism on vaccines, governments are slow to respond to that -- restrictions aren’t loosened as quickly as we currently seem to be anticipating,” Ian Williams, a strategist at Peel Hunt, said by phone. There’s also a question over how quickly consumer behavior will return to normal, he added.

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