European stocks posted their best day in six weeks on Tuesday, rebounding from a sharp slide as optimism around Brexit and US stimulus helped allay concerns about a further hit to the world economy by a new variant. of the coronavirus in Great Britain.
The pan-European STOXX 600 Index finished 1.2% higher on widespread gains, recovering from a more than 2% drop in the previous session, which was also its biggest one-day decline in nearly two months.
The European Union is giving a “final push” in a bid to reach a post-Brexit trade deal with Britain, its chief negotiator said Tuesday. Both sides are making slow progress on fisheries, a major sticking point, days before the end of a transitional deadline since leaving the bloc.
“(The progress in fishing) highlights the willingness to move towards something that will eventually break the current stalemate,” said Joshua Mahony, senior market analyst at online trading platform IG.
Recent economic data, which helped London’s benchmark index reverse initial losses, that Britain’s economic recovery from the coronavirus crisis was faster than previously thought in the third quarter. The index advanced 0.6%, breaking a three-day losing streak.
The losses were triggered by the emergence of a new, fast-spreading variant of coronavirus in Britain, which has forced wider lockdown and countries around the world to close their borders to the UK. On Tuesday, the EU recommended rolling back the border closures to allow freight transport to resume.
“The UK’s economic isolation led by covid-19 is serving to provide a large dose of reality about the kind of disruption that could occur if negotiators fail to reach a (Brexit trade) deal by the end of the year,” he said Mahony.
Tech stocks and banks, sensitive to Brexit, led the rally in Europe, while materials stocks lagged behind falling commodity prices.