Europe midday: Vaccine optimism a boost as investors eye Brexit talks

European shares extended gains at midday on Wednesday as investors took heart from positive Covid-19 vaccine news in the US.

The optimism fuelled optimism on Wall Street overnight and helped the pan-European Stoxx 600 index rise 0.54% with all major bourses higher.

US regulators reported they had no issues with the Pfizer/BioNTech Covid-19 vaccine while Johnson & Johnson said it could produce late-stage trial results next month.

However, the optimism was tempered as investors eyed last-ditch talks to break the Brexit trade deal impasse. UK Prime Minister Boris Johnson is flying to Brussels today for talks with European Commission President Ursula von der Leyen.

"With the S&P 500 reaching record highs yesterday, we are seeing the FTSE 100 hit a nine-month high despite ongoing Brexit uncertainty. Now that the Pfizer vaccine is already being distributed throughout the UK, health officials are speculating that we will receive four million doses before the year is out," said Joshua Mahoney at IG.

"While there are questions around the efficacy of the AstraZeneca vaccine, markets have been dealt another bout of good news after Johnson & Johnson notified markets that their single-dose vaccine will complete final trials in January. "

"The pound is off to a surprisingly bullish start to the day despite the growing apprehension surrounding Brexit negotiations. Despite periodic tones of optimism, months of negotiations have clearly yielded little by way of progress."

"Nevertheless, as long as there is time, there is hope for a last-minute breakthrough. No doubt, the pound will be the currency to watch for the coming weeks, with the currency at risk given the potential for the UK to be jolted off the Covid recovery path and onto a more unstable track. "

In equity news, shares in German chemicals group Covestro soared in early trade before paring back gains as the company on Tuesday raised its 2020 earnings forecast as activities in the fourth quarter of the current year are stronger than previously expected.

The company said it now expected core earnings to be between €1.44bn - €1.5bn, compared with previous guidance of roughly €1.2bn due to better margin development in its polyurethanes and polycarbonate units.

Howden Joinery shares were up 7% as the company upgraded its full-year profit expectations.

The trade supplier of kitchens and joinery products said it expected full-year pre-tax profit to be around 10% above the top end of current analyst forecasts of £123m - £152m.

Shares in house builder Vistry rose on news it would consider reinstating a “modest” final dividend, citing strong cash performance.

Transport operator Stagecoach saw its shares up 6% despite a plunge in full-year profits. The company’s profits fell to £5.4m in the six months to October 31 compared with £65.9m for the same period last year, while revenue fell 43 per cent to £454.6m.