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Telecom Italia tops Europe’s STOXX 600 amid spiking COVID-19 cases

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Economy29 minutes ago (Nov 24, 2021 17:08)

© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 23, 2021. REUTERS/Staff

By Anisha Sircar and Shreyashi Sanyal

(Reuters) -European shares ended a four-day losing streak on Wednesday with shares of Telecom Italia (MI:TLIT) leading gains, but fears around Europe’s worsening COVID-19 situation and the prospect of severe restrictions restrained the market.

The pan-European STOXX 600 index climbed 0.1% after recording its worst session in nearly two months on Tuesday amid a continental resurgence in coronavirus cases and fears of rising interest rates.

Telecom Italia surged 15.6%, lifting the European telecoms sector by 1.2%, following news reports that KKR is considering boosting its offer for the company after top investor Vivendi (PA:VIV) called the initial one too low.

European stocks are on course for weekly losses as the return of COVID-19 curbs, rate hike and inflation concerns sparked fears of a weaker economic growth outlook.

Travel stocks slid by over 1.0% on Wednesday, extending their declines to a seventh straight day.

“People are waiting to see what impact COVID measures will have on economic growth in Q4 and next year. If the situation deteriorates and we see more aggressive responses from governments, there will be concerns over the overall European economic growth profile,” said Nick Nelson, head of European equity strategy at UBS.

Indeed, spiking coronavirus cases and supply chain constraints clouded Germany’s growth outlook as the Ifo institute said business morale deteriorated for the fifth month running in November, pushing the country’s benchmark index 0.4% lower.

“By far the biggest fall was in the services sector, which shows that the hospitality business was struggling in the first half of the month…Even when permitted to go to the shops and restaurants, consumers were increasingly choosing to avoid crowded spaces,” said Andrew Kenningham, chief Europe economist at Capital Economics.

Meanwhile, German Social Democrat Olaf Scholz said he had reached a deal with the Free Democrats and Greens to form a new coalition government that will end the Angela Merkel era.

Higher copper prices driven by easing fears of Chinese demand lifted miners by 0.2%, while energy stocks rose 0.7% after crude prices inched higher. [MET/L] [O/R]

Shares in British inspection and product testing company Intertek rose over 6% after reporting strong growth in quarterly revenue.

German medical equipment maker Draegerwerk plunged 12.0% after saying it expected sales and earnings to drop next year, citing weak demand for pandemic-related products.

Telecom Italia tops Europe’s STOXX 600 amid spiking COVID-19 cases

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