(Reuters) - European shares rallied on Wednesday, with insurers jumping after France’s AXA said it would pay a dividend, while improving global data spurred bets of faster economic recovery from the coronavirus crisis.
The pan-European STOXX 600 rose 2.5% to close at its highest since March 6, with Germany’s DAX .GDAXI outpacing the rest of Europe with a 3.9% gain.
The German index recorded its strongest close since Feb 27, and is just 9.5% below its all-time high.
European markets have performed strongly so far this week as several countries eased strict lockdown measures, while hopes of more stimulus and encouraging developments on a potential COVID-19 treatment have helped the STOXX 6000 recover more than 37% from March lows.
“When (the slump) happened, there was not a fundamental issue in the economy. It was all down to a single event and there’s no reason why we can’t come back very strongly,” said Randeep Somel, associate portfolio manager at M&G Investments.
China’s services sector returned to growth in May, a survey showed, while data from the euro zone suggested the worst of the pandemic’s economic impact was over.
The European Central Bank meets on Thursday and is expected to increase its bond purchases by 500 billion euros.
“While economists broadly agree the ECB will meet market expectations, it would not be out of the realm of possibility... to delay the increase - given that its current program is far from depleted,” Cantor Fitzgerald analysts wrote in a note.
Insurers .SXIP, automakers .SXAP, banks .SX7P and travel & leisure .SXTP stocks led the gains, up between 3.8% and 6.8%, as investors found value in beaten-up cyclical sectors.
Renault SA (RENA.PA) surged 10.5% after it finalised a 5 billion euro ($5.60 billion) loan from the French government and Goldman Sachs upgraded its stock to “buy”.
Lufthansa (LHAG.DE) gained 7.7% as it vowed to step up restructuring measures after posting a first-quarter net loss of 2.1 billion euros ($2.35 billion).
Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur, Kirsten Donovan