European stocks break off 4-day rally on Brexit trade talks

(Reuters) – European stocks fell on Friday as doubts over a post-Brexit trade deal and a stimulus package in the United States capped gains at the end of a solid week.

The pan-European STOXX 600 index broke a four-day rally to end down 0.4%, reversing the gains that followed a surprise uptick in German corporate morale in December.

The German DAX dropped gains of up to 0.8% to end up in the red. The optimistic data from the Ifo Institute came even as Europe’s largest economy was in tight lockdown to contain a second wave of coronavirus infections.

The big exporting UK index fell 0.3%, despite a weaker pound after Britain and the European Union said they remained distant from each other for a number of issues and it was becoming increasingly likely that they would not reach a trade deal before the December 31 deadline. . [.L]

“This is the real final crisis moment, so it will likely affect the markets in a broader sense rather than just the play of the pound,” said Connor Campbell, financial analyst at Spreadex.

In the United States, Congress seemed less and less likely to meet a deadline to agree to $ 900 billion in fresh COVID-19 aid and could instead pass a third interim spending bill to prevent the government from close at midnight.

“The markets are approaching the weekend with these two great strangers. Investors might not react until Monday morning because the response, especially for Brexit, could be between Sunday and Monday morning, ”Campbell said.

The STOXX 600 ended the week with a 1.5% gain, its sixth week in the dark in Seven.

Optimism around vaccine deployments in Britain and potential deployments to another part of Europe before the end of the year, as well as progress in U.S. stimulus talks that underpin hopes for a global economic recovery, raised sentiment this week.

Travel and leisure stocks slipped on Friday, with British Airways owner IAG down 2.1% after a media report he agreed to buy Spanish airline Air Europa for € 500m ( $ 612.55 million).

In mergers and acquisitions moves, Dutch health-tech company Philips rose 1.7% after agreeing to buy US cardiac diagnostics and monitoring company BioTelemetry in a deal to worth $ 2.8 billion.

Finnish paint producer Tikkurila has climbed more than 60% after US company PPG Industries made an offer to buy the company for a total of 1.1 billion euros ($ 1.35 billion ).