U.S. Markets

Stocks jump on media reports of drug breakthroughs for coronavirus: traders

LONDON (Reuters) - European stocks jumped sharply on reports that a Chinese university found a drug to treat people with the new coronavirus and researchers in the UK saying they made a “significant breakthrough” in finding a vaccine, several London-based traders said.

A scientist leading UK's research into a coronavirus vaccine told Sky news that his team have made a "significant breakthrough" by reducing a part of the normal development time from two to three years to just 14 days.

Meanwhile, traders also cited a Chinese TV report that a research team at Zhejiang University has found an effective drug to treat people with the new coronavirus sharp for a rise in stocks.

Reuters has not verified those media reports, but several traders have attributed the sharp move in markets to the reports.

The benchmark pan-European STOXX 600 .STOXX index, which started the day on the backfoot, reversed early losses and rose as much as 0.8% on day.

U.S. stock futures also turned positive, rising 0.5%.

“Equity markets in Europe have had a sharp turnaround on the back of unconfirmed reports,” said David Madden, market analyst at CMC Markets UK.

“Traders have taken the view that the situation is now more likely to be under control and hopefully the spread of the health crisis will be stemmed and it hopefully leads to a return to normality in China and around the world.”

In the forex market, riskier currencies including the Australian dollar AUD=D3 climbed 0.3% at $0.6758. The Swedish crown SEK=D3 hit a near two-week high at 9.56 crowns per dollar while the euro/Swiss franc EURCHF=EBS exchange rate, a barometer of risk sentiment, strengthened.

Reporting by Thyagaraju Adinarayan, editing by Karin Strohecker