MILAN/FRANKFURT: European stocks closed higher on Wednesday as more positive updates on Covid-19 vaccine and merger activity in the region helped offset worries about the fast-spreading virus.

The pan-European STOXX 600 index rose 0.4%, returning to a more than eight-month high hit earlier this week.

Economically sensitive stocks such as automakers, banks, miners and retailers rose more than 1%, leading sectoral gains.

After a sluggish start, European bourses got a boost from news that final results from Pfizer Inc’s Covid-19 vaccine trial showed its shot had a 95% success rate and two months of safety data, paving the way for it to apply for an emergency US authorization.

However, the market response was measured as investors expect any vaccine rollout to take time, while more US and European restrictions in the absence of fresh stimulus could weigh on economic activity.

M&A also drove big swings in stocks, with Britain’s RSA Insurance gaining 4.6% after it backed a 7.2 billion pound ($9.55 billion) cash offer from Canada’s Intact Financial and Denmark’s Tryg in one of Europe’s biggest financial takeover bids this year.

Deutsche Boerse rose 2.4% after the German stock exchange operator said it would acquire an 80% stake in corporate governance adviser Institutional Shareholder Services (ISS) for about $1.8 billion.

Among decliners, German automotive supplier Schaeffler fell 5.3% after it set mid-term sales targets that disappointed investors.

Shipping group Maersk slipped 1.0% after it reported quarterly sales and operating profit in line with previous forecast and maintained its earnings forecast.—Reuter