Europe’s STOXX 600 jumps 1% as banks lead market rebound, US election in focus By Reuters

By Ankika Biswas and Pranav Kashyap

(Reuters) -Europe’s main stock index notched its biggest one-day gain in five weeks on Friday, as banks led an overall market rebound after recent declines, with investors assessing economic data, corporate earnings and the upcoming U.S. elections.

The pan-European index closed 1.1% higher, after losing nearly 3% over the past three days, but still logged a weekly decline.

Moving on earnings momentum, the banking sector was the top weekly gainer, while food & beverages was the worst-hit this week.

For the day, financial services, banks and technology sectors were at the forefront of investors’ buying spree.

All the major regional bourses including those of Germany, France, Spain and Italy also closed around 1% higher.

Some caution persisted ahead of next week’s tightly contested U.S. presidential election, which partly prompted the STOXX 600 to log its steepest monthly decline in a year on Thursday.

As markets anticipate a likely return of Republican Donald Trump to the presidency, the potential for higher tariffs and increased defence budgets is seen dealing a blow to an already struggling European economy.

Investors have also been on edge on uncertainties around the European Central Bank’s interest-rate cut path amid recent economic data, ahead of the U.S. Federal Reserve’s policy decision next week.

“The stronger-than-expected euro-zone GDP and inflation data released this week, as well as some comments by ECB policymakers, poured some cold water on expectations that ECB might accelerate the pace of easing,” said Franziska Palmas, Capital Economics’ senior Europe economist.

“However, by the December meeting, renewed economic weakness and well-behaved inflation will convince the ECB to cut the deposit rate by 50 bps.”

Reckitt Benckiser (LON:) jumped 7% after the British consumer goods company, along with U.S.-based Abbott Labs (NYSE:), was cleared of liability in a preterm formula case.

A.P. Moller-Maersk rose 4%, extending gains for the second day following the shipping company’s strong demand outlook.

French energy infrastructure company Technip (EPA:) Energies was also among the top STOXX 600 gainers, up 6% and rising for the second day after lifting its annual revenue guidance.

Italian lender UniCredit rose 3.5%, likely boosted by Fitch Ratings increasing its long-term rating on debt to BBB-plus.

On the flip side, Fugro slumped 16% after the geotechnical services provider’s third-quarter revenue unexpectedly fell in the U.S. and the Middle East.

Lufthansa lost 3% after HSBC downgraded the German airline’s stock to “hold” from “buy”.

In another likely boost for sentiment, Swiss inflation fell to an over three-year low, indicating more Swiss National Bank rate cuts.