MILAN: European shares closed at their highest in almost two weeks on Tuesday, powered by cyclical stocks, following signs that business activity in the continent was rebounding faster than expected from a coronavirus-driven slump.
The pan-European STOXX 600 index ended 1.3% higher, with economically sensitive sectors such as banks, automakers, miners and insurers gaining between 1.9% and 3.3%.
Eurozone stocks rose 1.6% after IHS Markit's Purchasing Managers' Index (PMI) showed a historic coronavirus-induced downturn in the bloc had eased again in June as businesses reopened after weeks of lockdown.
The index recovered more than expected to 47.5 from May's 31.9, after touching a record low of 13.6 in April.
Germany's DAX jumped 2.1%, France's CAC 40 rose 1.4% and the UK's FTSE 100 rose 1.2% after better-than-expected readings from Europe's largest economies.
Trillions of dollars in stimulus from central banks and governments have helped the STOXX 600 recover nearly 37% from March lows, although the pace of recovery has slowed in June amid worries over a fresh rise in coronavirus cases.
Helping Germany's DAX outperform, Bayer AG gained 5.8% after reports that the company is set to reach a settlement this week with US plaintiffs that claim its glyphosate-based weedkillers cause cancer.
German metals trader Kloeckner & Co jumped 17.5% after it provided positive earnings outlook for the second quarter.
Payments company Wirecard, mired in an accounting scandal, bounced 18.8% after shedding more than 140% in the past three sessions. UK-listed drugmaker Hikma Pharmaceuticals fell 5.6% after a major shareholder sold most of its nearly 1 billion pound stake.
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