Europe Markets

European stocks close higher despite fears over rising virus cases; Wirecard files for insolvency

Key Points
  • The pan-European Stoxx 600 closed up by 0.9%, with auto stocks leading the gains as most sectors and major bourses traded in positive territory.
  • The IMF released its latest outlook in which it forecast a contraction of 4.9% in global gross domestic product in 2020, lower than the 3% fall it predicted in April.
  • On Wall Street, stocks cut earlier losses amid news that U.S. regulators had relaxed post-financial crisis era restrictions.

European stocks closed higher on Thursday despite concerns over a global economic downturn and record spike in coronavirus cases in the U.S.

The pan-European Stoxx 600 closed up by 0.9% provisionally, with auto stocks leading the gains as most sectors and major bourses finished in positive territory.

Global markets continued to digest the IMF's latest forecast for the global economy and warning of soaring debt levels. On Wednesday, the IMF released its latest outlook in which it forecast a contraction of 4.9% in global gross domestic product in 2020, lower than the 3% fall it predicted in April.

The fund also downgraded its GDP forecast for 2021. It now expects a growth rate of 5.4%, down from a forecast of 5.8% made in April. The fund said that the downward revisions were due to social distancing measures likely remaining in place during the second half of the year, with productivity and supply chains being hit.

On Wall Street, stocks cut earlier losses, despite a surge in coronavirus cases in certain U.S. states. Banking stocks rallied across the board on news that U.S. regulators had relaxed post-financial crisis era restrictions.

Stocks on the move

Embattled German payments company Wirecard announced Thursday morning that it had filed for insolvency with a Munich district court, following revelations that $2.1 billion had gone missing from its balance sheet. The company's shares plunged by a further 71%.

Lufthansa shares climbed 7% after major shareholder Heinz Hermann Thiele decided to back the airline's 9 billion euro ($10.1 billion) bailout from the German government, reversing his earlier opposition.