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European stock rally fades despite M&A surge and Wall Street gains

European stocks closed higher on Monday but gave back earlier gains driven by vaccine hopes and a flurry of M&A activity.

The Stoxx Europe 600 index SXXP, +0.14% rose 0.2% after ending last week nearly 1.7% higher, the best weekly return since the week ending August 7. The French CAC 40 FR:PX1 rose 0.4%, but the German DAX DAX, -0.07% and the FTSE 100 index UKX, -0.09% fell 0.1%.

Investors will hear from the Federal Reserve, the Bank of England and the Bank of Japan in the coming days in a busy week for central bank meetings.

European stocks faded in the afternoon despite a strong start on Wall Street. The Dow Jones Industrial Average DJIA, +1.27% climbed 1.4%, or 377 points, in early trading, while the S&P 500 SPX, +1.42% was 1.7% up and the Nasdaq COMP, +1.74% was 2.4% higher.

Renewed hopes over a coronavirus vaccine also helped improved sentiment at the beginning of the week.

Pfizer Inc.’s PFE, +3.98% chief executive officer Albert Bourla said in an interview Sunday that the drug maker should know if its COVID-19 vaccine candidate will work by the end of October — and if approved, it could be distributed in the U.S. by the end of the year. Pfizer is partnering with German drug maker BioNTech BNTX, +3.72% on the vaccine’s development.

Oxford University…

Callum Keown, Barbara Kollmeyer

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