Banks, automakers drive European stocks higher, EU recovery plan awaited

• The pan-European STOXX 600 rose 0.3pc, hovering near a 11-week high hit in the previous session, led by hard-hit banking, travel and leisure, and auto sectors.
• French lender BNP Paribas SA jumped 6.9pc, while energy majors BP Plc and Total SA gained about 2pc despite falling oil prices.
• UK's commodity-heavy FTSE 100 jumped 0.9pc, while Spain's banking-heavy IBEX gained 1.4pc.

European shares edged higher on Wednesday as investors focused on a fresh EU stimulus plan , but renewed US-China tensions over Hong Kong tempered optimism about a global economic recovery.

The pan-European STOXX 600 rose 0.3pc, hovering near a 11-week high hit in the previous session, led by hard-hit banking, travel and leisure, and auto sectors.

French lender BNP Paribas SA jumped 6.9pc, while energy majors BP Plc and Total SA gained about 2pc despite falling oil prices.

UK's commodity-heavy FTSE 100 jumped 0.9pc, while Spain's banking-heavy IBEX gained 1.4pc.

The easing of lockdowns in many European countries and improving economic data have spurred buying in the growth-exposed cyclical sectors in recent weeks, putting European stocks on course for a modest 2.9pc gain in May.

"European investors are really focusing on the reopening and that's gathering some momentum," said Ian Williams, strategist at Peel Hunt.

"With the cyclicals, the most extreme risks seem to have been priced in and people are looking for some cheaper opportunities."

The eurozone stock index also gained 0.5pc as the European Commission prepares to unveil a plan to help the EU economy recover from its coronavirus slump with a mix of grants, loans and guarantees exceeding 1 trillion euros.

Hopes for a co-ordinated fiscal response to the coronavirus crisis have been boosted since France and Germany made proposals for a 500-billion-euro recovery fund.

Asian markets, however, struggled after fresh protests in Hong Kong over new national security laws proposed by Beijing, while US President Donald Trump warned of a strong response to China's move by the end of this week.

Automakers were boosted by an 8.7pc surge in French carmaker Renault after it and Nissan Motor Co announced steps in a wide-ranging revamp of their partnership to slash costs and survive.

Germany's Volkswagen AG rose 2.5pc after sources told Reuters it was in final talks to seal its largest investment deals with Chinese electric vehicle (EV) firms.

Finnish tyre maker Nokian Tyres Plc jumped 16pc after it named a new chief executive officer.

Chipmaker Infineon Technologies AG dipped 2.1pc after it raised about 1.06 billion euros ($1.16 billion) by issuing new shares to partially finance its $10 billion acquisition of US-based Cypress Semiconductor.