Europe midday: Shares hold on to gains as BBVA deal cheers investors
European shares remained in bullish mood at lunchtime on Monday as positive economic data in Asia and news that Spanish bank BBVA was selling its US division for $11.6bn provided momentum.
The pan-European Stoxx 600 index was up 0.74%, with Spain’s IBEX powering ahead by 1.92%, having retreated slightly from a 2.5% rise. All other major bourses followed suit while Dow Jones futures were up 281 points.
China’s industrial production soared 6.9% in the 12 months to October and retail sales were up 4.3%. Japan reported a better-than-expected 5% rise in third quarter GDP, while 15 Asian countries also signed the free-trade Regional Comprehensive Economic Partnership.
“Solid and steady gains are arguably just what investors need after a very volatile period. The catalyst for the latest move for equities is more positive noises on vaccines, the formation of a new trading bloc involving the likes of China, Japan, South Korea, Australia and New Zealand, and better-than-expected Japanese GDP figures,” said AJ Bell investment director Russ Mould.
In the UK Brexit trade talks enter yet another “crunch week” as Prime Minister Boris Johnson, who has suffered from Covid-19, was ordered into self-isolation after meeting a member of parliament who contracted the virus.
“Brexit talks also look set to continue beyond the end of this week, with the same fault lines of fishing and level playing field provision the main obstacles to progress. It now seems likely that the deadline for the talks to end this week is likely to get pushed out further with a new deadline of December 10 being talked about,” said CMC Markets analyst Michael Hewson.
In corporate news, BBVA soared after agreeing to sell its US operations to PNC Financial Services for $11.6bn.
The news sent shares in Banco Sabadell up 15% on hopes of a takeover by BBVA could buy it. Banco Santander shares rose 5%.
Vodafone shares were up 4% as the mobile phone operator reported a 1.9% fall in half-year earnings, but maintained its dividend and reiterated free cash flow and core earnings guidance.
Insulation maker Kingspan fell 3.4% as the company predicted annual profit slightly higher than the year before despite a drop in sales during the first nine months of the year.