European Stocks Snap Rally With Spanish Bank Dealmaking in Focus

(Bloomberg) -- European stocks fell, with health shares down the most, as investors assessed gains that had pushed equities to an almost nine-month high.

The Stoxx Europe 600 Index closed 0.2% lower, as drugmakers and travel and leisure shares offset gains in insurers and autos. The export-heavy FTSE 100 Index retreated 0.9%, underperforming the wider market as the pound rose on expectations of a Brexit trade agreement.

Dealmaking was in focus, with Spain’s Banco Bilbao Vizcaya Argentaria SA falling 4.4% after confirming that it’s in talks to buy rival Banco de Sabadell SA, which extended Monday’s gains. International Consolidated Airlines Group SA declined 3.3% following a report it had agreed to buy Globalia’s Air Europa and after EasyJet Plc posted a loss.

European stocks are pausing after a strong rally in November, boosted by positive vaccine news from Pfizer Inc. and BioNTech SE last week, and from Moderna Inc. on Monday. While shares in companies which have benefited from the lockdowns have taken a leg lower, this year’s laggards, like banks, autos and travel stocks, have seen a boost. However, some investors remain cautious, given the rapid spread of infections.

“We know the end-state is better, so we’re going to probably have a vaccine by the middle of next year, Marija Veitmane, senior multi-asset strategist at State Street Global Markets, said by phone. “More and more people will be vaccinated and we can positively return to economic growth, but we need to get there, and it’s very, very uncertain as to how we get there still.”

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