European stocks claw back losses despite fears of spreading virus
EUROPEAN stocks bounced back as investors shrugged off fears over the spread of a deadly coronavirus from China, while economic data beat expectations.
The Continent’s bourses jumped during the session, clawing back much of the week’s losses but stumbling just before the close.
The FTSE 100 closed up 1pc, handed an extra boost by a rise in the dollar that put pressure on sterling. Nearly all the blue-chip index’s constituents posted gains, as it clocked up its best one-day gain since the relief rally directly after the general election.
Trading was strong from the starting bell, with investors enthusiastically buying back into continental shares after the latest activity gauge for Germany’s private sector came in above analysts’ expectations, pointing to a continued comeback for Europe’s largest economy.
When purchasing managers’ index data for the UK came in, the pound briefly whipsawed, with an initial burst upwards cut off by a simultaneous shift to low-risk assets.
That only put more fuel on the FTSE 100 fire, with the index up as much as 1.72pc at one point.
“The key takeaway from this batch of PMIS is that advanced economies appear to be at a turning point,” said Simon Macadam, global economist at consultancy Capital Economics.
“Admittedly, given how far the indices had fallen, many remain at near-recessionary levels. But the stabilisation or outright improvements in the surveys suggest that [developed markets] are turning a corner.”
Standout individual movements were fairly limited across London’s indices, but there were a few notable shifts.
Just Eat shares dropped by 15p to 865.6p after regulators took a lastminute decision to announce they would investigate the group’s planned tie-up with Dutch food-delivery peer Takeaway.com. The FTSE 100 group’s suitor announced it would push back its takeover timeline to give time for the Competition & Markets Authority to decide whether it will escalate its inquiry. Jefferies analyst Giles Thorne called the timing of the 11th-hour intervention “strange”, but said he expects “only a minor delay in the completion timetable” as a result.
On the FTSE 250, shares in payments firm Finablr plummeted after founder and chairman BR Shetty’s investment vehicle said it had pledged over half its stake in the company – 393.2m shares – to secure a loan. Finablr said the borrowings were used “to refinance an acquisition facility” that another of Indian billionaire Mr Shetty’s vehicles had used to fund Finablr’s 2014 takeover of foreign exchange group Travelex. Finablr closed the day down 35.8p, or 27pc, at 95p. It is the latest blow for the firm, which has been caught by a short attack on
NMC Health – which is also chaired by Mr Shetty. NMC itself was the biggest faller among blue chips, with the Abu Dhabi-based hospital operator – which is still reeling from Muddy Waters Research’s criticism of its financial reporting last month – dropping 57p to £13.48 after Emirates NDB Bank sold 2.16m shares in the group. The sale – equivalent to about 1pc of the total issue – was at an 11pc discount to Thursday’s closing price.
Analysis by Bloomberg found that the Shetty fortune has dropped by more than £1bn since the short attack in December.