U.K. Stocks Start 2021 With Rally as Vaccine News Fuels Appetite
(Bloomberg) -- U.K. equities led gains as European indexes kicked off 2021 trading higher amid optimism over the rollout of vaccines and bets on an economic rebound.
The FTSE 100 Index jumped as much as 3.1% and closed 1.7% higher in London, its biggest rise in a month, driven by mining stocks. The benchmark Stoxx Europe 600 Index pared gains to 0.7% in the afternoon as U.S. shares fell.
Investors are entering the new year with a focus on the coronavirus pandemic response and global stimulus measures that could fuel an economic recovery and corporate profit growth. The U.K. gave the first shots of a Covid-19 vaccine from AstraZeneca Plc and the University of Oxford in the race to halt the spread of the virus, which looks set to lead to England’s third national lockdown.
“Positive momentum for markets continues into the new year,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg Bank. “The market still looks through the increase in Covid-19 infections and focuses more on the strong economic recovery this year.”
Urbahn said that Berenberg invests in U.K. equities because of uncrowded positioning, “fast” vaccine distribution and lower Brexit uncertainty after the trade deal was signed at the end of 2020.
The market was also encouraged by today’s economic data. Euro-area manufacturing grew the fastest in more than 2 1/2 years in December.
Mining stocks got a boost from the rise in copper and nickel prices, fueling gains in the FTSE 100. Rio Tinto Plc jumped 5.2% and BHP Group Plc rallied 5.7%.
Banking stocks underperformed other industries, with Natwest Group Plc losing 5.3% and Lloyds Banking Group Plc retreating 4.4%.
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