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European stocks bounce off lows on virus treatment hopes

CoronavirusAug 24, 2020 05:05AM ET
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© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt

By Sruthi Shankar

(Reuters) - European stocks bounced from a two-week low on Monday as signs of progress in developing a COVID-19 treatment offset fears about a resurgence in virus cases across the continent that could risk stifling an economic recovery.

The pan-European STOXX 600 index (STOXX) rose 1.3%, mirroring gains for Asian markets after the U.S. health regulator said on Sunday it authorized the use of blood plasma from patients who have recovered from COVID-19 as a treatment.

Spain's Grifols (MC:GRLS), one of the world's top producers of treatments based on human plasma, gained 3%.

AstraZeneca Plc (L:AZN) jumped 2.5% after the Financial Times reported the Trump administration was considering fast-tracking an experimental COVID-19 vaccine being developed by the company.

"The weekend's vaccine news is at the fore," said Keith Temperton, an analyst at Lombard Forte. "But we're in this mid-summer volume vacuum, where the path of least resistance is higher."

Oil and gas companies (SXEP) led the surge in Europe, gaining from a rise in crude prices as storms closed in on the Gulf of Mexico, shutting more than half its oil production. [O/R]

Technology (SX8P), mining (SXPP) and chemical (SX4P) companies also rose nearly 2%.

British telecoms company BT Group (L:BT) jumped 4.3% after a media report that its board was preparing to defend it against takeover approaches from rivals and buyout firms.

The gains in European equities come after a lacklustre week that saw data pointing to a stalling business recovery in the euro zone amid a surge in coronavirus cases.

A UK government data showed on Friday the reproduction "R" number of COVID-19 infections had risen and may now be above 1, indicating a risk that the overall epidemic is growing.

Similarly, Germany, France and Spain have seen a surge in virus cases, with their leaders looking at tightening travel restrictions.

"The way we're looking at the COVID narrative seems to be changing. The market is looking at a better situation in terms of hospitalisation and death rates," Temperton said.

Shares in British Airways-owner IAG (L:ICAG) dropped 0.5% and Air France (PA:AIRF) dipped 0.4% after the UK government said travellers to France are required to self-certify that they are not suffering coronavirus symptoms or have been in contact with a confirmed case within 14 days preceding travel.

European stocks bounce off lows on virus treatment hopes
 

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