Europe Markets

European stocks close higher as US reaches stimulus deal; Virgin Money up 26%

Key Points
  • The pan-European Stoxx 600 provisionally closed up more than 2.5%, with oil and gas stocks surging over 6% to lead gains while chemicals declined by more than 0.5%.
  • U.S. senators and White House officials have reached an agreement on the massive stimulus package to mitigate the economic hit from the pandemic.
  • Business morale in Germany logged the steepest fall in March since the country's reunification in 1990, the closely-watched Ifo Institute said Wednesday. 

European markets closed higher Wednesday, as investors remained attuned to the coronavirus pandemic.

The pan-European Stoxx 600 provisionally closed up more than 2.5%, with oil and gas stocks surging over 6% to lead gains while chemicals declined by more than 0.5%.

The European blue chip index had earlier racked gains of more than 4.5% at the start of trading after U.S. senators agreed to the Trump administration's massive economic rescue bill, unlocking $2 trillion worth of funds.

White House official, Eric Ueland said early on Wednesday that U.S. senators and White House officials had reached an agreement on a massive stimulus package to mitigate the economic hit from the coronavirus outbreak.

It comes after days of tense negotiations between Republicans and Democrats over how the funds should be handed out to workers and businesses to help cushion the blow from the coronavirus pandemic.

Hopes of an impending deal prompted the Dow to soar more than 2,100 points on Tuesday, or more than 11%, notching its biggest one-day percentage gain since 1933. The S&P 500 rallied 9.4% for its best day since October 2008. On Wednesday, stocks in the U.S. continued to rise on the back of the news.

On the data front, British consumer price inflation retreated in February from the previous month's six-month high, official figures showed Wednesday, with CPI (consumer price index) inflation falling to 1.7% in February from 1.8% in January.

Business morale in Germany logged the steepest fall in March since the country's reunification in 1990, the closely-watched Ifo Institute for Economic Research said Wednesday. The Ifo business climate index fell to 86.1 in March, lower than expectations of 87.7 and down from 96.0 in February.

In terms of individual stocks, Virgin Money U.K. shares jumped 26% while French insurer CNP Assurances added 20%. At the other end of the European blue chip index, British pest control group Rentokil tumbled 18% after withdrawing its 2020 guidance, suspending its dividend and announcing cost-cutting plans.