/Europe Markets: European stocks surge to best level in 16 months on Brexit optimism, U.S. earnings

Europe Markets: European stocks surge to best level in 16 months on Brexit optimism, U.S. earnings


Reuters

EU’s Chief Brexit Negotiator Michel Barnier talks with European Justice Commissioner-designate Didier Reynders of Belgium and Dutch Foreign Minister Stef Blok during the General Affairs council addressing the state of play of Brexit, in Luxembourg October 15, 2019.

European stocks on Tuesday rallied on optimism over the possibility of a deal for an agreed Brexit pact as well as better-than-forecast U.S. earnings.

After losing 0.49% on Monday, the Stoxx Europe 600

SXXP, +1.11%

ended 1.1% higher to 394.02, its best level since May 22, 2018. Banks and insurers led the advance.

The German DAX

DAX, +1.15%

 increased 1.1% to 12629.79, the French CAC 40

PX1, +1.04%

 added 1% to 5702.05 while the U.K. FTSE 100

UKX, -0.03%

 fell a fraction, closing at 7211.64.

U.K. banks switched directions for a third straight session, this time rising, as they trade on the relative prospects of an agreed deal for Britain to exit the European Union. Lloyds Banking Group

LLOY, +5.24%

 and the Royal Bank of Scotland

RBS, +5.07%

  rose as Michel Barnier, the top EU negotiator, said a deal was possible this week, and Bloomberg News reported negotiators were closing in on a draft deal. The pound

GBPUSD, +1.1661%

 surged to nearly $1.28.

The FTSE 100 however was weighed down by struggles from multinationals such as GlaxoSmithKline

GSK, -1.70%

  and Unilever

ULVR, -1.65%

 , which are hurt by a rising pound.

A number of U.S. companies reported better-than-forecast earnings, including JPMorgan Chase and Johnson & Johnson, sending the Dow industrials

DJIA, +1.03%

 higher.

The worst Stoxx 600 component was Wirecard

WDI, -12.35%

 , which lost 16% as the Financial Times reported that internal documents appeared to show the company was trying to inflate profit and revenue at an Irish and Dubai subsidiary.

Wirecard said it “categorically rejected” the allegations, which it called “a compilation of a number of false and misleading allegations.”

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