European Stocks Rise as Risk Appetite Fuels Bounce in Laggards

(Bloomberg) -- European equities gained as investors looked to risk assets that have lagged the market recovery, amid optimism over historic highs on Wall Street.

The Stoxx Europe 600 Index rose 0.7% by the close in London in a broad rally, with all but three sectors in the green. Banking, telecom and construction stocks were among the biggest gainers.

While U.S. stocks surged to a record on Tuesday, European equities remain about 15% below their all-time high, as the region lacks big technology names that have fueled the rapid market recovery on Wall Street. Europe has been under pressure due to a rising number of new Covid-19 cases and fresh restrictions on travel, but the continent may also be on investors’ radars as an alternative developed market to the U.S.

“The downside is very limited as we see increasing interest in European equities,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg Bank. “In light of the U.S. elections and the cyclical recovery worldwide there is a catch-up potential for European equities. The biggest concern would be a real escalation in U.S.-China tensions and a vaccine failure.”

Among individual stocks, Royal Unibrew A/S shares jumped 9.8% after the company raised its 2020 earnings forecast, with the new guidance beating the highest analyst estimate.

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