Europe close: Stocks finish higher after quiet session

European stocks advanced on what was a relatively quiet Thursday in the absence of a trading session in the US and only a few economic data releases.

The pan-European Stoxx 600 index finished the day 0.56% higher at 517.54 – its highest close since 24 June.

While political uncertainty continues to weigh on investors' minds in France ahead of this coming weekend's pivotal second-round vote, the UK's parliamentary elections on Thursday looked like a done deal, with London's FTSE 100 up 0.8%.

“Investors priced in the impact of Labour winning the 2024 election long ago, thanks to the polls having implied a landslide win for the party throughout the six-week campaign," said Dan Coatsworth, investment analyst at AJ Bell. “Markets have taken the prospect of a Labour government with equanimity, given the party’s manifesto promises not to jack up taxes and what feels like a charm offensive towards the City."

In economic news, German factory orders posted a shock 1.6% fall in May against a forecast rise of 0.5%, and following the 0.2% decline the previous month.

The HCOB eurozone construction PMI fell to 41.8 in June from 42.9 in May, showing that the sector's contraction picked up pace last month. The rate of decline in output was the the second-strongest since mid-2020.

Finally, the CIPS/S&P Global UK construction PMI fell to 52.2 in June, down from the two-year high of 54.7 in May. This was the fourth straight month above 50, but well below the 53.6 reading expected by economists.

Market movers

Smith and Nephew surged 7% as Swedish activist investor Cevian Capital purchased a 5% stake in the medical equipment manufacturer. The purchase of the 5.021% stake is Cevian's first investment in the FTSE 100 company and makes the Swedish firm its third-largest shareholder.

Shares in German auto parts giant Continental soared 10% after it told analysts in a pre-close call that it predicts strong growth in China this year. Citi also upgraded the stock to 'buy'.

Reinsurance stocks such as Hiscox, Beazley and Swiss Re, which have been out of favour over the past week, were rebounding slightly after RBC downplayed the long-term impact of Hurricane Beryl on share prices. The broker said reinsurers tend to underperform the market in July as hurricane season commences, before outperforming in September to November.