A surge for London-listed companies brought European stock markets within striking distance of an all-time high on Friday as investors cheered the likelihood of an orderly Brexit after a landslide election victory for British Prime Minister Boris Johnson.
The UK-focused FTSE mid-cap index jumped 5 percent to a record high, pushing the broader pan-European STOXX 600 up 1.1 percent to 412 points, up 1.1 percent for the week.
The blue-chip FTSE 100 also advanced on Friday as solid gains in banks and utilities helped the export-heavy index shrug off the impact of a surge in sterling, which typically weakens sentiment toward component companies.
Dublin’s ISEQ, also considered a barometer of Brexit sentiment, jumped to a 12-year high.
Markets believe a Conservative Party win would enable Johnson to deliver Brexit within weeks, easing fears that the UK could crash out and ending three-and-a-half years of uncertainty over the shape of the country’s exit from the trading bloc.
“The big issue has been the lack of direction and that goes away, which is why sterling is rallying and Gilt yields are back up and domestically focused equities are gaining,” said Gaurav Saroliya, director of global macro strategy at Oxford Economics.
The benchmark European index is just two points shy of a record high hit in 2015.
It is also on track to end the year almost 20 percent higher, its biggest annual gain in a decade, as investors turn optimistic about another major economic issue — the prolonged US-China trade dispute.
Trade-sensitive German shares jumped 1.3 percent on Friday after the US agreed to suspend a new round of Chinese tariffs in return for Beijing buying more US farm goods.
All major country indices were trading higher.
The European travel and leisure index rose, boosted by a 7.5 to 9 percent surge for Brexit-sensitive airline stocks such as EasyJet PLC, International Consolidated Airlines Group and Ryanair Holdings PLC.
Delivery Hero SE gained more than 23 percent as it agreed to buy South Korea’s top food delivery app operator Woowa Brothers for US$4 billion and form a joint venture.
German consumer goods company Henkel AG & Co slipped 3.67 percent as the consumer goods company said it expects its earnings before interest and taxes margin to fall to 15 percent next year.
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