UPDATE 2-European shares rebound as Brexit trade deal progress overshadows virus worries

  • Reuters
  • Stock Market News
UPDATE 2-European shares rebound as Brexit trade deal progress overshadows virus worries
Credit: © Reuters.

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)

* Britain-EU rifts over fishing narrow

* U.S. Congress approves $892 bln pandemic aid package

* Tech stocks, banks lead broad-based gains in Europe

* AstraZeneca slips as asthma drug fails in late-stage trial (Updates to close)

By Susan Mathew

Dec 22 (Reuters) - European shares posted their best day in six weeks on Tuesday, rebounding from a sharp sell-off as optimism around Brexit and U.S. stimulus helped to allay worries of a further hit to the global economy from a new coronavirus variant in Britain.

The pan-European STOXX 600 index .STOXX finished up 1.2% on broad-based gains, recovering from a more than 2% slide in the previous session, which was also its biggest one-day drop in nearly two months.

The European Union is giving a "final push" in a bid to strike a Brexit trade deal with Britain, its chief negotiator said on Tuesday, with the two sides inching towards agreement on fishing - a major sticking point - days before the end of Britain's transition deal since it left the bloc. progress in fishing) highlights the willingness to move towards something that will eventually break the current deadlock," said Joshua Mahony, senior market analyst at online trading platform IG.

Helping London's blue-chip index .FTSE reverse early losses, data showed Britain's economic recovery from its coronavirus crash was quicker than previously thought in the third quarter. The index closed 0.6% higher, breaking a three-day losing streak.

The losses were triggered by the emergence of a fast-spreading new coronavirus variant in Britain, which has forced wider lockdowns there and led countries around the world to close their borders to the UK. The EU on Tuesday recommended rolling back border closures to allow freight to resume.

"The COVID-led economic isolation of the UK (is) serving to provide a heavy dose of reality of the kind of disruption that could come if negotiators fail to agree a (Brexit trade) deal by year-end," Mahony said.

Technology stocks .SX8P and Brexit-sensitive banks .SX7P led the rebound in Europe, while materials stocks .SXPP lagged as they tracked a decline in underlying commodity prices. MET/L O/R

Meanwhile, U.S. President Donald Trump on Tuesday signed a stopgap measure to fund U.S. agencies for another week after Congress passed a long awaited $892 billion COVID-19 aid package overnight. AZN.L was the biggest weight on the pan-region index, down 1.5% after its experimental asthma drug developed with U.S partner Amgen AMGN.O failed to meet the main goal of a late-stage trial.

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