MILAN/LONDON: European shares rose on Wednesday, but ended off highs as results of a poll rekindled concerns that Britain may leave the European Union hours before voting in the country's membership referendum starts.
The pan-European STOXX 600 index was up 0.4 percent, having risen earlier in the session by as much as 1 percent to its highest in almost two weeks. The FTSEurofirst 300 also settled off highs, up 0.5 percent.
The two indexes have risen over the past four sessions as worries that the UK would choose to leave the EU eased, having hit four-month lows in the previous week. The latest poll, by Opinium, showed the "Leave" camp with a one-point lead, on 45 percent, with "Remain" at 44 percent.
Banks and insurance were among the biggest sectoral gainers on Wednesday, rising 1 and 0.8 percent respectively, both however off highs. Julius Baer advanced 1.4 percent after Citigroup upgraded the Swiss financial group to "buy" from "neutral", while Deutsche Bank added 1.9 percent, rising for a fourth day in a row as investors priced out Brexit risks.
"Deutsche Bank is among the most exposed companies in Germany to the UK, saleswise," Alpha Trading portfolio manager Stefan De Schutter said. Spain's Merlin rose 3.9 percent after agreeing a merger with Metrovacesa to form Spain's largest property group. Positioning ahead of the referendum was varied.
"I think the result of the Brexit vote is 50/50, and it will probably be very tight," said Olivier de Berranger, a fund manager at French firm La Financiere de L'Echiquier, which manages around $9 billion in assets. Berranger said he had cut his portfolio's equity allocation to 25 percent from 32 percent at the start of June due to the uncertainty over the referendum. He had taken protection against any market downturn by buying a July "put" option on the Euro STOXX 50 index with a strike price at 2,950 points.
Arcanum Asset Management head Paul Gleeson was confident Britain would vote to stay in. Gleeson bought "call" options allowing him to buy the FTSE at 6,900 points in July. "I am expecting a 'Remain' vote and a big rally," he said. Credit Suisse said it would cut its FTSE 100 end-2016 target by 6 percent if Britain voted to leave.
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