European shares rose on Monday, hovering near nine-month highs, as strong China data and hopes of a COVID-19 vaccine renewed bets for a swifter economic recovery, while Spanish lender BBVA surged on a deal to sell its U.S. business.
The pan-European STOXX 600 rose 0.7% by 1030 GMT, with banks and travel stocks gaining the most.
BBVA surged 16.45% to an eight-month high after PNC Financial Services Group said it would buy its U.S. business for $11.6 billion in cash.
China’s factory output rose faster than expected in October and retail sales surged, as a recovery in the world’s second-largest economy from its COVID-19 slump gathered momentum.
“Solid and steady gains are arguably just what investors need after a very volatile period, with the catalyst for the latest move for equities being more positive noises on vaccines,” Russ Mould, investment director at AJ Bell said in a note.
The benchmark STOXX 600 has gained nearly 40% from its March lows, but has underperformed its U.S. peers this year as a recent spike in coronavirus cases across Europe overshadowed optimism around a new vaccine.
Although Europe’s bank stocks outperformed other major sectors last week, their performance is the second worst this year as lenders grapple with rock-bottom interest rates amid the COVID-19 pandemic.
However, European Central Bank Vice President Luis de Guindos asked Euro zone banks on Monday to keep using their capital buffers to absorb losses without holding back credit to the real economy, which, he said, needs time to rebound from a pandemic-induced recession.
Overall, quarterly results for STOXX 600 companies have been better than expected, with 68% of those that have reported results so far beating earnings estimates, according to Refinitiv data.
In company news, Vodafone Group, the world’s second-largest mobile operator, gained 3.1% after it said it was increasingly confident about its full-year performance following a “resilient” first-half, despite underlying momentum being obscured by the impact of COVID-19.
Deutsche Bank rose 0.5% after Chief Executive Officer Christian Sewing said the German lender will focus on the bank’s restructuring over the next year rather than on mergers.
Reporting by Shashank Nayar in Bengaluru; Editing by Anil D’Silva and Shounak Dasgupta