LDN - Business

European stocks kick off November with fresh highs, banks rally

[November 01, 2021] By Anisha Sircar

(Reuters) - European stocks hit record highs on Monday, entering November with a strong momentum on the back of upbeat earnings reports, while a surge in banking shares buoyed euro zone markets.

The pan-European STOXX 600 gained 0.7% to surpass its previous all-time high marked in mid-August as the global mood was also supported by Japan's post-election boost and stabilising coal prices in China. [GLOB/MKTS] [MET/L]

Euro zone banks jumped 2.4% - hitting their highest level in more than two years - as investors held on to their bets for two interest rate hikes from the European Central Bank (ECB) next year. [GVD/EUR]

The banking-heavy Italian and Spanish indexes rose 1.4% and 1.2%, respectively, while the German DAX and France's CAC 40 rose about 1% each.

"There's a lot of earnings optimism, the feel-good factor of companies bouncing back," said David Madden, markets analyst at Equiti Capital.

"We spent so much time being afraid of the tapering in September and early October. I think people are now going to see tapering as a positive sign, that you can completely come full circle."

The STOXX 600 in October recorded its best month in seven with a 4.6% rise. Investors are waiting for updates from the U.S. Federal Reserve, which is expected to start tapering bond purchases. Policy adjustments are also likely at the Bank of England and Reserve Bank of Australia later this week.

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The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 29, 2021. REUTERS/Staff

Shares in German conglomerate Thyssenkrupp and steelmaker Salzgitter rose around 3% after the U.S. and the European Union ended a dispute over steel and aluminium tariffs.

French drugmaker Sanofi gained 1.7% after HSBC upgraded the stock to "buy".

Volkswagen inched up 0.7% after saying its Skoda Auto would resume production on Sunday following a two-week outage caused by the chip crisis.

Britain's FTSE 100 rose 0.6%. Barclays dipped 1.6% after it said Chief Executive Officer Jes Staley will stand down following regulators' investigations into his ties with convicted sex offender Jeffrey Epstein.

Pandora slumped 6% after an earnings update from the world's largest jewellery maker showed weak sales growth at its own stores in the third quarter.

Markets are also monitoring the UN COP26 climate summit in Glasgow, which kicked off on Sunday, where global leaders are expected to negotiate divisive issues and set a new post-2025 climate finance commitment.

(Reporting by Anisha Sircar in Bengaluru; Editing by Subhranshu Sahu and Sriraj Kalluvila)

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