European Stocks Jump as Brexit Deal Optimism Boosts U.K. Shares

24 Dec 2020, 11:57 PM IST

(Bloomberg) -- European equities gained on Wednesday amid optimism that negotiators are drawing closer to a historic post-Brexit trade deal.

The Stoxx Europe 600 Index rose 1.1% by the close in London, with travel, banks and energy stocks advancing the most. The FTSE 250 Index jumped 1.7% to the highest since Feb. 26 as officials familiar with the matter said the outline of a post-Brexit trade agreement has been reached. The pound’s strength was a drag on the FTSE 100, which only rose 0.7%.

British and European Union officials are trying to close a deal on Brexit as soon as Wednesday after Prime Minister Boris Johnson and European Commission President Ursula von der Leyen intervened personally. Negotiators are still putting the finishing touches to an accord, according to the officials, who spoke on condition of anonymity, while others cautioned that the deal is yet to be finalized.

European Stocks Jump as Brexit Deal Optimism Boosts U.K. Shares

“It seems we get a happy end as optimism is rising over an imminent Brexit deal, with intensive talks continuing between EU and U.K. teams to secure an agreement before Christmas,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg Bank. “This would be a boost for sentiment, supporting in particular British domestic stocks which have a positive correlation to the pound.”

U.K. banks, such as Lloyds Banking Group Plc, outperformed and housebuilders, such as Persimmon Plc, also rose.

Meanwhile, France lifted a blockade at Britain’s busiest port Wednesday morning and said EU citizens and residents will be able to travel from the U.K. if they are able to show a negative Covid-19 test.

“Investors seem to particularly appreciate the last effort being made by British and European negotiators on a ‘final push’ for a Brexit deal,” said Pierre Veyret, technical analyst at ActivTrades, “Even if no strong directional market movement is expected before 2021, the bullish scenario remains the most likely as bullish leverages remain stronger than bearish ones.”