U.S. Markets

European stocks hit two-week high as Trump update lifts global mood

(Reuters) - European shares closed at a two-week high on Monday, as positive updates on U.S. President Donald Trump’s health, a U.S. stimulus package and a spate of dealmaking activity lifted investor spirits.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 2, 2020. REUTERS/Staff

The pan-European STOXX 600 index .STOXX gained 0.8%, extending gains from last week. Sectors considered more economically sensitive such as oil and gas .SXEP, travel and leisure .SXTP, and automakers .SXAP boosted the main markets.

That was despite a 36.2% plunge in Cineworld CINE.L after the world's second-biggest cinema chain said it would close all of its UK and U.S. movie theatres later this week, leaving as many as 45,000 workers unemployed.

Oil majors Royal Dutch Shell RDSa.L, BP BP.L and Total TOTF.PA surged, with crude prices jumping more than 6%.

Investors took heart from signs that Trump’s health is improving after he tested positive for COVID-19 on Friday, news that sent financial markets into a tailspin.

Doctors treating Trump said he could be sent back to the White House as soon as Monday, although outside experts warn that his case may be severe, raising uncertainty about the outcome of the Nov. 3 presidential election and a new U.S. fiscal stimulus being debated by lawmakers in Washington.

“Markets may remain choppy over the coming weeks,” said Graham Secker, chief European equity strategist at Morgan Stanley.

“Once we get some clarity on the U.S. election, Brexit and vaccine front, I think that’s going to be a positive catalyst for market.

“In the next 3-6 months view, this is a market where you’d want to buy into the weakness because we do expect 2021 to be quite a lot better than what we have been seeing this year.”

Telecom stocks rose the most among sectors, with Vodafone VOD.L up 4.7% after its lenders approved the merger of India's Bharti Infratel BHRI.NS and Indus Towers, in which Vodafone has a stake.

Madrid-listed stocks .IBEX outperformed with 1.2% on reports of consolidation in the banking sector.

Unicaja UNI.MC jumped 15.1% after it confirmed reports that it was in preliminary talks for a potential merger with its peer Liberbank LBK.MC, which surged 13.6%.

Italy's Nexi NEXII.MI rose 3.1% after SIA and it agreed a long-awaited merger to create a dominant domestic payments group with 1.8 billion euros ($2 billion) in revenue.

French waste and water utility Suez SEVI.PA fell 4.2% after investment fund Ardian decided not to make a bid in competition with bigger rival Veolia VIE.PA. [nFWN2GW07F]

Reporting by Sruthi Shankar; editing by Uttaresh.V and Ed Osmond