Europe: Stocks rise for fourth day on healthcare bounce

[BENGALURU] European shares rose for a fourth straight session on Thursday, as optimism over businesses returning to work and stimulus for the battered euro zone economy outweighed rising US-China tensions.

The pan-European Stoxx 600 index rose 1.6 per cent to hit an 11-week high, with healthcare stocks rebounding from losses earlier this week.

GlaxoSmithKline, the world's largest vaccine maker, gained 2.1 per cent as it laid out plans to produce 1 billion doses of vaccine efficacy boosters for Covid-19 shots next year.

Other defensive sectors such as personal & household goods, telecoms and utilities also rose.

UK cinema operator Cineworld surged 21.4 per cent to the top of the Stoxx 600 after saying it expected to reopen all its venues in July and had secured additional liquidity.

The Stoxx 600 has risen more than 32 per cent from its March lows as investors hope for a gradual recovery with policymakers injecting trillions of dollars into the global economy and drugmakers racing to develop a Covid-19 vaccine.

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The mood in Europe has brightened this week on a 750-billion-euro (S$1.18 trillion) EU plan to prop up the bloc's virus-hit economies, while hopes are running high the European Central Bank will further expand its bond purchase programme next week, possibly by 500 billion euros.

"I think there's a good chance they will expand their... asset purchase program," Nicola Mai, sovereign credit analyst at PIMCO told the Reuters Global Markets Forum.

"The current purchase envelope will likely be exhausted before year end, and the ECB may want to start providing some more certainty that it remains in play beyond that."

Investors looked past a fresh escalation in Sino-US tensions after China's parliament approved a decision to move forward with national security legislation for Hong Kong.

US President Donald Trump has promised to take action over the move by the end of the week.

"Markets are taking solace from the fact that neither party seems incentivised to escalate threats economically so far. But I think there will be a point when markets will be fixated on US-China tensions," said Brooks Macdonald Asset Management's Edward Park.

Italian luxury group Salvatore Ferragamo surged 16 per cent after it called back its former chief executive officer to help weather the Covid-19 storm.

And Scandinavian airline SAS slumped 11.2 per cent after revealing it was in talks with shareholders to raise funds as the collapse in travel demand hurt its quarterly results.

REUTERS