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European stocks close higher as policy stimulus hopes grow; Greene King up 51%

Key Points
  • The pan-European Stoxx 600 jumps 1% during afternoon deals; basic resources surge 2%.
  • U.S. stocks continue to bounce back from last week's sharp sell-off.

European stocks rose on Monday as hopes emerged for stimulus from central banks and fiscal measures from major economies such as China and Germany.

European Markets: FTSE, GDAXI, FCHI, IBEX

The pan-European Stoxx 600 closed provisionally up more than 1%, with basic resources surging over 2%. All sectors and most major bourses were in positive territory.

German Finance Minister Olaf Scholz said on Sunday that Germany has the fiscal strength to mitigate any future economic crisis with "full force" and suggested that Berlin could free up around 50 billion euros ($55 billion) of extra spending.

Meanwhile, China's central bank unveiled a key interest rate reform on Saturday intended to lower borrowing costs for companies and reinvigorate an economy being negatively impacted by its trade war with the U.S. U.S. Treasury yields, which has been causing global fears of a recession after plunging last week, showed signs of a rebound Monday.

On Wall Street, stocks continued to bounce back from last week's sharp sell-off, as Treasury yields rebounded and the U.S. agreed to extend a temporary reprieve to Chinese telecom giant Huawei.

Back in Europe, leaked British government documents warning of the negative impact of a no-deal Brexit revealed that Britain could face food, medicine and petrol shortages should it leave the European Union without a deal on October 31.

Michael Gove, the minister in charge of planning for a no-deal scenario, said the documents were based on a worse-case scenario, while British news outlets cited government sources as blaming the leak on a hostile former minister intent on undermining Prime Minister Boris Johnson's negotiations with the bloc.

In terms of individual stocks, British pub group and brewer Greene King surged almost 51% by the end of the trading session, after it was announced that a unit of Hong Kong's CK Asset Holdings would buy the company for £2.7 billion.

Meanwhile, online supermarket Ocado was another top performer, rising 4.6% after J.P. Morgan flagged a "tipping point" in profitability.

At the other end of the European blue chip index, Dutch chemicals company IMCD slipped 2% after its earnings report on Friday cited a challenging macro-economic environment as impacting growth for the second quarter.