European shares closed at an 11-week high on Tuesday, with travel and leisure stocks soaring on hopes of a revival in tourism as countries gradually reopened after a months-long lockdown.
The pan-European STOXX 600 rose 1.1% to hit its highest closing level since March 9.
Europe’s battered travel sector jumped 6.9% following reports Spain and Germany would ease travel restrictions, while no noticeable increase in infections were reported after the easing of lockdowns.
British Airways owner IAG jumped 22.5%, low-cost carrier easyJet Plc gained 19% and UK-listed shares of travel group TUI soared 52%.
Germany’s Lufthansa extended gains after the government threw the airline a 9 billion euro ($9.87 billion)lifeline on Monday.
UK’s FTSE 100 returned from a holiday to rise 1.2% as Prime Minister Boris Johnson said Britain will reopen thousands of high street shops, department stores and shopping centers next month.
Other hard-hit sectors such as eurozone banks surged 6.5%, bouncing off record low levels, while insurers and automakers gained about 3% each.
“We believe that the pro-cyclical market bias that we called for will have some legs, and build on itself in the next weeks,” J.P. Morgan Cazenove analysts told clients.
“It should last while PMIs are normalizing. The upmove in Eurozone PMI that we saw last week is likely to extend in the next reading, for June.”
The STOXX 600 has climbed 30% from its mid-March lows, as hopes of further policy support and improving economic data fueled hopes of a faster economic recovery from the novel coronavirus pandemic.
All eyes will be on the European Commission’s release of its recovery plan on Wednesday to gauge the progress of a Franco-German proposal for a 500 billion euro grants-based coronavirus recovery fund.
Paris-headquartered shopping center operator Klepierre SA jumped 12.6% after saying it had reopened 80% of its European malls and hopes to reopen 90% of them within 10 days.
French carmakers Renault SA and Peugeot SA jumped 6.6% and 5.8% respectively.
French President Emmanuel Macron said that measures announced to help the country’s car industry were worth more than 8 billion euros ($8.8 billion) in total.
Macron said autonomous and electric vehicles will form a key part of the sector after the coronavirus crisis.
Sanofi fell 1.3%, in line with broader healthcare losses, despite the French drugmaker’s impending $13 billion payday from selling most of its 20.6% stake in U.S. partner Regeneron.
($1 = 0.9116 euros) (Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Ken Ferris)