UK stocks soared on Tuesday, leading a rally in European equities, in the British market's first trading session since a Brexit deal was struck with the European Union.
The FTSE 100 Index was up 2.18 per cent at 12.50pm London time while the FTSE 250 rose 2.14 per cent, with stocks most exposed to the British economy such as homebuilders and travel companies pushing the advance.
Meanwhile, the UK pound rose 0.26 per cent against the US dollar to $1.3487, however it steadied versus the euro, as dealers continued to digest the 1,246-page agreement document.
EU ambassadors have given the green light to the draft free-trade agreement with the UK, paving the way for formal approval on Tuesday.
The Stoxx Europe 600 Index was up 1.1 per cent in early morning trading, extending Monday's gains after US President Donald Trump signed a virus relief bill. Among individual movers, Deutsche Lufthansa was up 6 per cent after the chairman of its Swiss unit said it was able to pay back a government loan and won't need additional borrowings.
Although the pandemic and lockdowns have weighed on European stocks this year, equities have rallied since the end of October, boosted by positive vaccine developments, the prospect of a Brexit trade deal and further stimulus measures.
“It remains fascinating whether stock markets can use more momentum or whether they will suffer from potential profit taking, as the end-of-year rally has already pushed many stocks towards new records and some investors could be tempted to take some money off the table,” Comdirect Bank strategist Andreas Lipkow said in an email.
Despite the day’s gains, the FTSE 100 is still down 12 per cent year-to-date, while Germany’s DAX is up 4.7 per cent and the S&P 500 is up 16 per cent in 2020.