Europe close: Basic resource and bank shares lead gains

European stocks rallied on Monday as investors breathed a sigh of relief after the FBI cleared Democratic candidate Hillary Clinton of any wrongdoing over the weekend, together with a surge in bulk commodity futures and some well-received corporate releases.

The benchmark Stoxx Europe 600 index finished up 1.53%, Germany's DAX was 1.93% firmer and France’s CAC 40 gained 1.91%.

At the sector level, the Stoxx 600's gauge of Basic Resource shares gained 2.96% to 350.44 with an equivalent gauge for bank shares putting on 2.72% to close at 150.08.

Significantly, the odds of a 25 basis point rate hike by the Federal Reserve at its 14 December policy meeting climbed from 76% at the end of the previous week to 82%, according to Bloomberg data.

Oil prices edged higher, with West Texas Intermediate up 0.65% to $44.36 a barrel and Brent crude up 0.11% to $45.63. In parallel, coking coal futures in China surged by their daily maximum allowed percentage gain limit of 10%, alongside near 4% gains for steel rebar futures after the local government of China's largest steel city, Tangshan, issued an urgent notice ordering coking plants and blast furnaces to halt production after several days of heavy pollution.

Tangshan produces 11% of the country's total output of crude steel.

The FBI said over the weekend that a fresh inquiry into Clinton’s communications found nothing to change the conclusion it had come to over the summer and that there had been no evidence of criminal wrongdoing after she used a private email server for government work.

"What to do with a more uncertain race? Anchor to realpolitik but prepare for volatility. We think this week will be a volatile one, but unlike a month ago, risk assets now reflect a meaningful ‘fear’ premium. With the VIX near 20, Morgan Stanley’s Global Risk Demand Index now registering outright ‘fear’, and our client conversations indicating that the election has put investment decisions on hold, markets are clearly fretting about the election.

"One final thought: if it wasn’t already evident from our research these past four months, we take this election and its impact very seriously. Hence, our last bit of advice for those concerned with the outcome on Tuesday: if you are able, then VOTE!," Morgan Stanley's Michael Zezas said in a research report sent to clients.

In corporate news, HSBC gained ground as it said profits in the third quarter fell 86% compared to last year due to a disposal of its Brazilian bank, but underlying profits were higher in all four of its businesses.

Shares of stricken Italian lender Banca Monte dei Paschi di Siena rocketed 22% on reports that Qatar's sovereign wealth fund might participate in its cash raising excercise.

Dutch postal group PostNL jumped higher after rebuffing a sweetened takeover offer from Belgian rival Bpost.

Ryanair flew higher after the budget airline reported a rise in first-half profit as revenue and customer numbers grew despite difficult market conditions, and upped its long-term traffic forecast.

Informa was in the black after the business intelligence group said it was on track to meet full-year expectations.

Hammerson edged up after it exchanged contracts for the disposal of Westmorland Retail Park in Northumberland to Arch Commercial Enterprise for £36m.

Hiscox advanced after reporting a 14.3% increase in gross written premiums for the first nine months of the year.

Inmarsat rallied after Barclays upgraded its stance on the satellite company to ‘equalweight’ from ‘underweight’.

On the data front, Eurozone retail sales declined less-than-expected in September compared to the previous month, but year-on-year sales were lower than economists had expected.

The seasonally-adjusted volume of retail trade among the 19 Eurozone countries dropped 0.2% month-on-month, the same as the revised fall from August but better than the 0.3% fall estimated by economists.

Compared to September last year, retail sales rose 1.1%, according to estimates from Eurostat, the statistical office of the European Union, which was worse than the revised 1.2% increase seen a month ago and short of the consensus estimate of 1.3%.

Eurostat said the 0.2% month-on-month decrease was mainly due to falls for non-food products and for automotive fuel, while food, drinks and tobacco segment rose by 0.6%.

Earlier, figures from Destatis showed German manufacturing orders fell 0.6% on the month in September, versus expectations of a 0.2% increase. On the year, orders were up 2.6%.