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European Shares Extend Recovery Rally on Brexit Deal Hopes

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European shares gained for a second day on Wednesday, extending a recovery from a sharp selloff at the start of the week, following a report that a Brexit trade deal could be struck later in the day.

The panEuropean STOXX 600 index rose 0.3 in holiday thinned trade, after a 2.3 slump on Monday. Londons FTSE 100, however, lagged as the pound gained.

A trade deal between the United Kingdom and the European Union is possible on Wednesday after progress in talks on fishing rights, political editor Robert Peston at Britains ITV tweeted.

The news, days before Britains exit from the bloc after a transitional period, lifted British midcaps, along with France agreeing to reopen its borders to England on Wednesday.

The detection of a new coronavirus variant had seen much of the world shut its borders to the island country, prompting warnings from supermarkets owners about food supply shortages and hammering stocks across the board on Monday.

What were seeing today is very much a yearend feel to markets, said Craig Erlam, senior market analyst at OANDA Europe.

There is a lot of caution around this new COVID strain and what it means. So, I dont think we can read too much into small gains, especially when theyre still partially recovering from one days losses.

Daimler was the top boost to the STOXX 600, up 2.6 after business newspaper Handelsblatt reported that the German luxury carmaker is preparing a stock market listing of its trucks division.

Markets also tracked the…

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