European shares rise on upbeat economic data; Allianz, Renault jump

European shares joined a global rally on Wednesday, helped by gains in insurer Allianz and carmaker Renault, with signs of a pickup in business activity adding to hopes of a faster economic rebound as several countries relax coronavirus-led lockdowns.

The pan-European STOXX 600 rose 1.2pc, hovering near three-month highs, as a survey showed China's services sector returned to growth in May, while data from the euro zone suggested the worst of the pandemic's economic impact was over.

Early gains on the continent were led by insurers, automakers, banks and oil and gas stocks.

"When (the slump) happened, there was not a fundamental issue in the economy. It was all down to a single event and there's no reason why we can't come back very strongly," said Randeep Somel, associate portfolio manager at M&G Investments.

Massive stimulus from major central banks and hopes of a COVID-19 vaccine have helped the STOXX 600 recover about 35pc from March lows, leaving it about 16pc below February record highs.

Among individual stocks, French insurer AXA rose 7.1pc and was the biggest boost to the STOXX 600 as it decided to halve its dividend but said it could propose an additional fourth-quarter shareholder payment if conditions improved.

Renault SA jumped 7.5pc after it finalised a 5 billion euro ($5.60 billion) loan from the French government and Goldman Sachs upgraded its stock to "buy".

Lufthansa gained 4.1pc as it vowed to step up restructuring measures after posting a first-quarter net loss of 2.1 billion euros ($2.35 billion).

Shares in Infineon technologies, AMS and ASM International rose between 4.0pc and 5.3pc after U.S. chipmaker Microchip raised its earnings forecast.

French luxury goods group LVMH edged up 0.1pc after fashion trade publication WWD reported that its $16.2 billion takeover of Tiffany & Co is looking less certain.