Europe midday: Stocks and sterling rally as polls suggest Remain lead

At midday, the benchmark Stoxx Europe 600 index was up 2%, while Germany’s DAX and France’s CAC 40 were both up 2.5%, and London’s FTSE 100 was 1.5% higher, trading at two-month highs.

Meanwhile, the pound rallied to $1.4947 – a fresh high for 2016 – after the results of a poll by Ipsos Mori for the Evening Standard released at 1100 BST showed 52% of respondents supported the Remain campaign, with 48% on the Leave side. Sterling had hit a six-month high of $1.4846 in Asian trading.

“Another swing in opinion polls back towards remaining in the EU has sparked a six-month high for the British pound and a surge in UK and European stocks,” said CMC Markets’ Jasper Lawler.

“Investors who wanted to protect their portfolio against adverse moves in sterling or other UK assets will have done so already. With a slight bias to a Remain vote, there is no need for any additional hedging trades and the lighter volume suggests day traders are sitting on their hands until the result is out.”

As far as the pound is concerned, Rabobank said a clear victory for the Remain camp would spark a relief rally that would push cable through 1.50, while a Brexit would open the door to a sharp decline towards the 1.26 level.

Oil prices gained ground, with West Texas Intermediate up 1.5% at $49.87 a barrel and Brent crude 1.7% firmer at $50.75.

The mood in financial markets was also boosted in late morning trade by news that the odds of a Remain vote in the EU referendum at bookmaker Betfair had risen to 86% from 77%. Ten days ago, the odds of Remain stood at 66%.

Betfair spokesperson Naomi Totten said: “Remain has been backed hard again this morning with the price coming in from 1.3 (1/3 or a 77% chance) to 1.17 (2/13 or an 86% chance) on the back of £4m traded. There was nearly £10m traded on the day of the Scottish Referendum so the market will be worth watching closely as polling day continues.”

Opinion polls released late on Wednesday were split. An Opinium survey gave the Leave campaign a one-point lead, at 45% to 44%, while a poll by TNS also showed Brexit was ahead at 43%, with Remain on 41%.

On the other hand, a ComRes survey for the Daily Mail and ITV News put Remain on 48% and Leave on 42%. Excluding undecided voters, it found remain leading Leave by 54% to 46%. Meanwhile, a YouGov poll gave Remain a two-point cushion, ahead of leave by 51% to 49%.

Voting in the EU referendum began at 0700 BST and will close at 2200 BST, with the results expected early on Friday.

With the focus firmly on the referendum, some disappointing Eurozone data came and went with little fuss.

Markit’s flash eurozone composite purchasing managers’ index fell to a 17-month low of 52.8 in June from 53.1 in May, below economists' expectations of a reading of 53.1.

The services PMI also fell in June, to an 18-month low of 52.4 from 53.3 in May, below forecasts of 53.4.

However, the manufacturing PMI rose to a six month high of 52.6 from 51.5 in May, above expectations of 51.5.

Corporate news was thin on the ground, but Tesco rallied in London after the supermarket operator's first-quarter results confirmed sales growth continued for the second successive period.

Pharmaceuticals giant AstraZeneca was on the front foot despite announcing that US health authorities had recommended against its FluMist Quadrivalent influenza vaccine.