European stocks closed at over a five-week high, with travel stocks surfing a wave of optimism following reports of progress in developing a Covid-19 vaccine.
Investors were encouraged by an early-stage study on US biotech firm Moderna’s experimental vaccine for Covid-19 that provoked immune responses.
Meanwhile, AstraZeneca jumped 5.2% after a report said positive news on the University of Oxford’s potential Covid-19 vaccine that has been licensed to the drugmaker could be announced as soon as today.
Hard-hit airline stocks like Aer Lingus and British Airways-owner IAG, Ryanair and Lufthansa rose between 9.7% and 10.7%, while cruise operator Carnival jumped 11.4%.
The travel & leisure index surged 6.1% to lead sectoral gains, but still remains the worst performer in Europe this year with a 33% plunge as the coronavirus pandemic brought global travel to a halt.
The pan-European Stoxx-600 rose 1.8%, closing just short of levels last seen in early March, while euro zone blue-chips jumped 1.7% to hit their highest level since March 5.
“Our central scenario is that a vaccine would be broadly available from the second quarter of next year, or the fourth quarter of this year in our upside scenario,” Mark Haefele, chief investment officer of UBS Global Wealth Management, said.
“Various potential treatment options are also in the pipeline, raising hopes that societies can cope with the pandemic without full shutdowns," he said.
Expectations were also high among investors heading into an EU summit later this week that leaders will agree on a recovery fund of €750bn for pandemic-hammered economies.
France believes it is possible to reach an EU deal at the end of the week on the European recovery plan and budget, the office of the French presidency said.
The office also said that France could obtain a European subsidy of nearly €40bn to help finance the French recovery plan.
The European Central Bank concludes its policy meeting today although no major announcements are expected.