European shares at one-month high

European shares surged on Thursday as a swathe of middling local economic data fuelled continued bets on easy monetary policy to combat the shock from the coronavirus outbreak.

The pan-European STOXX 600 index rose 0.9%, slightly trimming some of the day’s gains after Euro zone sales marked a surprise decline in July from the prior month. Moreover, a survey of business activity showed the bloc’s dominant service industry almost grinding to a halt in August, as spiking COVID-19 cases in Spain and Italy prompted new curbs. Thursday’s data, coupled with weak inflation readings seen earlier this week, pointed to continued fiscal and monetary support from the government and the European Central Bank. After the U.S. Federal Reserve last week vowed to tolerate spikes in inflation, the ECB is expected to follow suit.

Travel and leisure stocks led gains across Europe on hopes of a COVID-19 vaccine, while bank stocks bounced back after three straight sessions of losses.

French drugmaker Sanofi and its British peer GSK rose after they announced starting of a clinical trial for a protein-based COVID-19 vaccine candidate.

While the STOXX 600 hit a more than one-month high, it still stayed within a trading range seen since early-June. The index needs to close at least 15 points higher to break out of the range. After bouncing back from March lows, a recovery in euro zone stocks and the economy appeared to be stuck in a rut, brewing uncertainty over the remainder of the year.

Asian equities pared early gains on Thursday amid growing worries about Sino-U.S. relations while the euro hit a one-week low as traders wagered on central bank action to tame the single currency.

MSCI’s broadest index of AsiaPacific shares outside of Japan, which was up more than 0.5% earlier in the session, slipped 0.1% with Chinese and Hong Kong shares leading the losses.

The Hang Seng fell 0.7% while China’s blue-chip index was 0.5% lower.