Optimism over trade, Brexit boost European shares; UBS, Swedbank fall

LONDON: European shares rose on Friday and were set for their best week in a month as positive signs on US-China trade talks and UK lawmakers' vote to delay a potentially chaotic exit from the European Union supported investor appetite for riskier assets.

The pan-European STOXX 600 was up 0.3 percent at 1020 GMT, piercing the Oct. 5 high set on Thursday, and all the major bourses were in positive territory.

London's FTSE 100 outperformed, lifted by its heavyweight oil and mining stocks on higher metals and crude prices. Germany's trade-sensitive DAX was up 0.3 percent.

The mood was also boosted by growing expectations that Britain will not leave the European Union on March 29 without a deal to minimise economic disruptions following Thursday night's parliamentary votes.

Technology stocks rose 1 percent to Oct. 17 highs as better-than-expected results from US chipmaker and sector bellwether Broadcom overnight stirred hopes that the industry is recovering from the slowdown in Apple and smartphone demand that knocked shares and earnings late last year.

STMicroelectronics topped the Milan bourse.

"Semiconductor vendors have been talking about an H2 '19 recovery since January and have been met with some scepticism in some parts of the market," said Liberum analysts in a note.

"However, it is positive that semiconductor vendors are still maintaining this view, even if we are only 1.5 months away from the half-year mark in the case of companies like Broadcom."

Investor confidence was also bolstered by news from China's state news agency that Washington and Beijing were making further substantive progress on trade talks, and upbeat comments from US President Donald Trump.

The Xinhua report said Chinese Vice Premier Liu He spoke by telephone with US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer.

The prospect of the trade talks between the world's two largest economies taking longer than expected tempered some of the gains, and there was still no clarity on how close they are on reaching an agreement.

"In addition to UK Prime Minister May's little victory in Parliament yesterday evening, this risk-on sentiment was mainly built on grounds of a widespread optimism following President Trump's recent statement about a "very responsible and reasonable China," said Pierre Veyret, technical analyst at ActivTrades.

Thursday night's votes saw May's government narrowly avert an attempt by lawmakers to seize the agenda on March 20 if no Brexit deal has been passed, with the aim of forcing a discussion of alternative Brexit options. That could limit May's options when she takes her case for delay to the EU.

Individual movers were driven by legal dramas.

UBS was down 1.3 percent after Switzerland's top bank said it is bulking up its litigation provisions after a French court slapped it with a hefty penalty last month.

Swedbank dropped 1 percent as the Danske Bank money laundering scandal deepens.

A Swedish TV programme reported that an internal report by Swedbank dated last September showed transactions totalling more than $10 billion between "suspicious" customers in Swedbank and Danske Bank had been done between 2007-2015 in the Baltics.

Wirecard sank more than 9 percent after Citi downgraded the German card payments company. The shares have plunged almost 40 percent since January.

The company rejected a report in German business daily Handelsblatt, citing court documents, that authorities in Singapore investigating Wirecard were looking into its operations in India, acquired in 2015.

Tour operator TUI jumped 5 percent after Morgan Stanley upgraded the stock noting that a softer or delayed Brexit should help the company.

The move was an early sign that this week's vote and the lower probability of a no-deal departure from the EU may already be helping soothe investor concerns about the damage to the UK economy.