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European stocks bounce on tech support, virus concerns linger

Sruthi Shankar
·2-min read
The German share price index DAX graph at the stock exchange in Frankfurt
The German share price index DAX graph at the stock exchange in Frankfurt

By Sruthi Shankar

(Reuters) - European stocks bounced on Tuesday after a sell-off in the previous session, as technology and healthcare stocks gained, but worries about new coronavirus restrictions in Britain and elsewhere kept travel stocks under pressure.

The pan-European STOXX 600 index <.STOXX> rose 0.8%, recovering from its worst fall in three months, with technology stocks <.SX8P> that have outperformed this year, rising 1.6%.

With COVID-19 cases rising rapidly in the UK, Prime Minister Boris Johnson is set to announce fresh restrictions that includes closing of pubs, bars, restaurants and other hospitality venues at 10 p.m. across England.

UK's midcap index <.FTMC>, made up of more domestically focussed companies, fell 0.5%, with pub owners JD Wetherspoon <JDW.L>, Mitchells & Butlers <MAB.L> and Marston's <MAR.L> trading flat to marginally higher.

UK's internationally oriented FTSE 100 <.FTSE>, however, rose 0.5%, benefiting from a weaker pound, while the German DAX <.GDAXI> jumped 1.1%.

"Growth stocks and megacaps have proven resilient showing that for now contagion hasn't set in with force," Sebastien Galy, macro strategist at Nordea Asset Management, wrote in a note. "This means that as volatility increases through losses one isn't forced that much to sell winners."

A slew of rating actions also helped, with Danish shipping firm AP Moeller Maersk <MAERSKb.CO> gaining 4.1% after JP Morgan upgraded the company's shares to "overweight", while British American Tobacco <BATS.L> gained about 3% after RBC boosted its rating to "outperform".

Travel & leisure stocks <.SXTP> fell 0.5%, adding to a 5.2% drop in the previous session, with surging COVID-19 cases across Europe threatening to hamper travel demand again.

Premier Inn-owner Whitbread <WTB.L> slipped 2.7% after saying it plans to cut 6,000 jobs in its hotel and restaurant units.

UK's Beazley <BEZG.L> said it expects claims linked to the novel coronavirus pandemic to double to $340 million, driving its shares down nearly 13%.

Airbus SE <AIR.PA> fell 1.9% after Chief Executive Officer Guillaume Faury told a French radio station that the situation with airlines was worse than what was expected since summer.

Italian stocks <.FTMIB> gained 1.2%, with Unicredit <CRDI.MI> up 0.5% after a local newspaper reported that Italy's Treasury once again turned to the lender to buy its stake in Monte dei Paschi di Siena <BMPS.MI>, which rose 5.3%.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)