Banks and travel documents take Europe’s STOXX 600 to new heights

The DAX chart of the German stock index is pictured on the stock exchange in Frankfurt, Germany on December 30, 2021. REUTERS / Staff

Jan. 4 (Reuters) – European stocks extended their New Year’s rally on Tuesday, led by economically sensitive banks and travel stocks on signs that the Omicron coronavirus variant may be less severe than initially feared.

The pan-European STOXX 600 index (.STOXX) finished up 0.8% to 494.02 points, hitting a record for a second consecutive session.

The European banks sub-index (.SX7P) jumped 3.3% to November highs and was the best performer of the day as government bond yields on both sides of the Atlantic rallied. were spurred on by expectations of a tightening of monetary policy.

Citigroup said it was overweight European banks, citing potential interest rate hikes, earnings growth and returns on capital. The brokerage ranked BNP Paribas (BNPP.PA), Lloyds (LLOY.L) and UBS (UBSG.S) as its top picks.

The European Travel and Leisure Index (.SXTP) jumped 3.5% to its highest level in more than six weeks. British airlines soared, with Ryanair (RYA.I) and British Airways owner IAG (ICAG.L) climbing 8.9% and 11.3% respectively.

Wizz Air (WIZZ.L) jumped 12.2%, leading the gains of the STOXX 600 after reporting an increase in traffic in December.

London’s FTSE 100 (.FTSE) gained 1.6%, catching a global rally as trade resumed after a long holiday weekend.

“There are tentative signs that this variant may not be as bad as feared,” said Max Kettner, chief multi-asset strategist at HSBC, in a note.

“UK hospitalizations have increased over the past two days, but the link clearly appears to be weaker than in the previous winter wave. As such, the sensitivity of cases to hospitalizations has barely budged until present. If this trend were to continue, that’s good news. “

The British Vaccines Minister said people hospitalized with COVID-19 in the UK generally had less severe symptoms than before. Read more

French Finance Minister Bruno Le Maire said that while the skyrocketing Omicron variant was disrupting some sectors, there was no risk that it would “cripple” the economy and stick to it. a 4% growth forecast for the 2022 GDP. Read more

Stock markets in Europe and the United States hit a series of record highs in 2021, as vaccine deployments and huge stimulus packages to boost the pandemic-stricken global economy offset concerns about the persistence of ‘high inflation and the new variants of COVID-19.

Home inventories including food delivery companies Delivery Hero (DHER.DE) and Just Eat Takeaway.com (TKWY.AS) fell between 7% and 8%, while major healthcare names also fell. moved back.

At the same time, data showed German unemployment fell more than expected in December, a further sign that the labor market in Europe’s largest economy remains resilient. Read more

Reporting by Sruthi Shankar in Bangalore; Editing by Subhranshu Sahu and Alison Williams

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