European stocks at seven-week high as travel stocks shine

  • Flutter and Ryanair top travel stocks on the rise
  • Travel and leisure index hits near 3-month highs
  • Luxury companies exposed to China decline

Nov 7 (Reuters) – European stocks closed at a more than seven-week high on Monday as rising travel and tech stocks helped offset a slowdown in luxury giants exposed to China.

The STOXX 600 benchmark index (.STOXX) rose 0.3%, extending gains after its third straight weekly gain.

Earnings in Flutter Entertainment Plc and Ryanair (RYA.I), up 4.2% and 3.8% respectively, propelled European travel and leisure stocks to near three-month highs. index (.SXTP) closed up 1.6%.

An arbitrator confirmed Fox Corp on Friday (FOXA.O) has 10 years to exercise its option to acquire a nearly one-fifth stake in Flutter-owned betting app FanDuel.

Irish stocks (.ISEQ) jumped 1.9%, carried by Ryanair after the airline posted its biggest after-tax first-half profit and said it expected to return to pre-COVID-19 annual profit levels this year.

Investors will focus on Tuesday’s U.S. midterm elections, which will determine control of Congress. Republicans have gained momentum in the polls and betting markets and analysts expect a divided government – with Republicans winning the House of Representatives and possibly the Senate.

“It’s usually a boat that lifts them all up. If sentiment is positive for the US, that also tends to lift European stocks,” said Giles Coghlan, chief market analyst at HYCM.

Meanwhile, European luxury stocks, including LVMH (LVMH.PA)Pernod Ricard (PERP.PA) and Hermes International (HRMS.PA)fell between 0.7% and 1.5%.

There have been mixed signals regarding the reopening of China. As health officials in China reiterated their commitment to strictly limiting COVID-19 over the weekend, Chinese leaders are considering reopening after nearly three years of tough pandemic restrictions with no set timetable.

“If we saw positive news from China on COVID and the Republicans won both the Senate and the House of Representatives, then I would see that to be positive for European stocks,” Coghlan added.

The STOXX 600 index started November on a stable footing, helped by a better-than-expected reporting season and hopes the Federal Reserve will make rate hikes in smaller increments.

A survey released on Monday showed investor sentiment in the euro zone improved in November, reflecting hopes that recent warmer temperatures and lower energy prices will prevent gas rationing on the continent this winter.

Among other actions, Telecom Italia (TLIT.MI) jumped 10.7% as Vivendi’s top investor (VIV.PA) would start talks with the new right-wing Italian government on a new plan to create a national broadband company.

UniCredit (CRDI.MI) fell 1.9%, hurt by a report of tensions between European Central Bank supervisors and the Italian bank over its capital allocation plans and presence in Russia, while GSK (GSK.L) lost 4.7% after its blood cancer drug failed a late-stage study.

Reporting by Shreyashi Sanyal and Ankika Biswas in Bengaluru; Additional reporting by Joice Alves; Editing by Uttaresh.V and Josie Kao

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Carol N. Valencia