European Stocks Rebound as Brexit Concern Eases

  • Lenders lead gains, trading volume surges in Stoxx 600 shares
  • U.K. campaigns suspended for 2nd day after lawmaker killed

Europe Stocks Rebound to Close Out the Week

European stocks climbed, paring a third weekly decline, as concern abated that Britain will exit the European Union and energy shares followed oil higher.

The Stoxx Europe 600 Index rose 1.4 percent at the close of trading. Campaigns on whether the U.K. should leave or stay in the EU were suspended for a second day after Labour Party lawmaker Jo Cox, who backed ‘Remain,’ was murdered while she met constituents. Odds for British secession as compiled from bookmakers by Oddschecker were lower for most of the day, before rebounding toward the end of the European session.

Italian and Greek lenders, among the worst hit earlier this week, led gains today. Total SA and BP Plc rose more than 1.9 percent, tracking gains in oil. The volume of Stoxx 600 shares changing hands was 64 percent higher than the 30-day average, and a measure of euro-area volatility fell 4.7 percent, the biggest slide in three weeks.

“Brexit fear is starting to ease up a little, and the market was a little oversold,” said Thorsten Engelmann, a trader at Equinet Bank in Frankfurt. “Even if Brexit should happen, the large declines in recent days mean that enough concern is still priced in.”

European stocks have struggled to maintain momentum after rallying as much as 16 percent from a February low to an April 20 high. Polls indicating a lead for the U.K.’s ‘Leave’ campaign weighed on the Stoxx 600 in recent days, dragging it lower in six of the past seven sessions. Also worsening sentiment were a drop in oil prices, concerns over monetary policy after the Federal Reserve and the Bank of Japan kept policies unchanged, and Spain’s upcoming general election.

While the Stoxx 600 is down 2.1 percent this week, capping its longest stretch of declines since April, today’s advance moderated the extent of the losses.

“It’s the more the fact that Brexit risk has been taking off the table for a bit and the campaigns have paused, so it’s a bit of a relief,” said Jasper Lawler, an analyst at CMC Markets Plc in London. “It doesn’t necessarily support the Remain camp, but it rather takes the focus off the referendum for a day after a week of intense focus.”

Among shares active on corporate news, Gamesa Corp. Tecnologica SA rallied 5.6 percent after getting approval to combine its turbine business with Siemens AG in a deal that would create the world’s third-largest maker of windmills.

Randgold Resources Ltd., which jumped 10 percent in the past seven days amid demand for gold as a haven, declined 4.6 percent.

(Corrects size and scope of volatility index in third paragraph.)
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