Europe close: Banks power ahead
European stocks racked up stellar gains on Monday, with banks in the lead as the latest EU referendum polls revealed a shift in support.
The benchmark DJ Stoxx Europe 600 index rose by 3.69% or 12.01 points to 337,79, while the Dax notched up a gain of 3.43% to 9,962.02 and France’s CAC 40 was up 3.3% to 4,340.76.
Banks were the standout gainers, with the Stoxx 600 sub-index for the sector up 4.61%.
At the same time, oil prices advanced, with West Texas Intermediate up 2.34% at $49.13 a barrel and Brent crude also up 2.21%, at $50.28.
Rebecca O’Keeffe, head of investment at Interactive Investor, said: “A significant shift in sentiment has seen global equity markets rally strongly as investors position their portfolios for a Remain vote. Investors who had been bracing themselves for the possibility of a vote to leave the EU had moved a substantial amount of money out of equities over the past two weeks, with many investors sitting on more cash than usual. With new polls suggesting a marked shift towards Remain, a wave of money is now entering the market, as investors view current index levels as oversold.
“However, the UK is not over the line yet, so although the odds of an exit vote have diminished dramatically, the possibility of further volatility and a shift back towards a more uncertain outcome over the coming days could see markets adversely react. For this morning though, investors are seeing financial and property companies lead the way higher as the market shrugs off its fears.”
A Survation poll in the Daily Mail revealed that support for the Remain campaign was in the lead, while two Yougov polls – one for ITV's Good Morning Britain and one for the Sunday Times – both showed Remain in front.
In addition, a ComRes poll for the Sunday Mirror revealed the percentage of people saying they’d be relieved if the UK stayed in the EU rose to 45% after the murder of MP Jox Cox, from 35% before.
Meanwhile, an opinion survey conducted for the Observer between Tuesday and Friday showed an even split but of the 10% undecided, 36% said they were leaning towards Remain.
The polls lifted the pound, which surged against the US dollar, hitting its highest level in two weeks. Sterling closed up 2.32% at $1.4695.
“We still see Bremain as the most likely outcome, even though we would not bet the house on it,” said Societe Generale. “This scenario would see further gains in cable - our initial target at 1.4750 looks easy following the overnight rally, 1.50 in the cards.”
In corporate news, UniCredit pushed higher after Italian newspaper Il Fatto Quotidiano reported that the bank was likely to appoint former government minister Corrado Passera as its next chief executive officer.
Spain’s Banco Bilbao Vizcaya Argentaria gained on reports it instigated a new strategic plan in March that was not announced to the market.
Shares in beleaguered German car maker Volkswagen jumped following a report it will submit its $10bn plan to fix emissions-cheating cars or get them off US roads this month.
Bayer was also a high riser after a report it is in talks with investment banks about strategic alternatives for its radiology supplies business.
GlaxoSmithKline was on the front foot after late-stage drug trials on its treatment for chronic obstructive pulmonary disease proved successful.
Hammerson was also in the black after saying it has exchanged contracts and completed the sale of Thurrock Shopping Park to TH Real Estate for £93m.
On the data front, figures from Eurostat showed construction output in the Eurozone dropped by 0.2% month-on-month in April, following a fall of 0.7% in February and a slide of 1.0% in March.
Building construction was weakest, shrinking by 0.4% versus March, while output from civil engineering bounced back 0.9% after a 1.7% drop in the month before.
Among the Eurozone's largest economies, output was 1.7% lower in Germany and off by 2.4% in Spain.
Data released earlier by Destatis showed German producer prices rose a little more than expected in May.
Prices were up 0.4% from April versus expectations of a 0.3% increase. On the year, however, producer prices were 2.7% weaker. Still, this was better than the 2.9% drop expected by economists.
Excluding energy, prices were up 0.2% on the month and down 0.8% on the year.