European stocks rebound with best day in 10 weeks

LONDON Mon Nov 19, 2012 11:37am EST

LONDON Nov 19 (Reuters) - European equities rebounded from multi-month lows on Monday to post their biggest daily gain in 10 weeks thanks to signs of progress in U.S. talks to avoid a budget crisis.

Leading Democratic and Republican lawmakers voiced confidence over the weekend that a deal would be reached to avoid the so-called "fiscal cliff" of some $600 billion of tax hikes and spending cuts due to take effect in January.

An unexpected rise in U.S. existing home sales for October added to the brighter sentiment towards the world's biggest economy on Monday, which has become a significant source of growth for European companies as their domestic region flirts with recession.

The FTSEurofirst 300 index provisionally closed up 2.3 percent to 1,091.49 points, while the EuroSTOXX 50 rose 2.8 percent to 2,496.37 points -- both posting their biggest one-day gain since early September and rebounding from multi-month lows.

"That (progress in negotiations) was the catalyst for the short-term gain of the market," said Vincent Guenzi, chief strategist at Cholet Dupont.

"That could help the market maybe gain 1 or 2 percent more, but to really have the end of the downtrend of the last weeks, we need something real."

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