European Shares Rebound Despite Stimulus, Covid Worries

European stocks rose on Tuesday after two sessions of declines despite escalation of U.S.-China tensions in the South China Sea, continued political uncertainty in Italy and doubts over the speed and size of U.S. stimulus.

Investors await a two-day policy meeting of the U.S. Federal Reserve starting later today for guidance on rates and any outlook on the Fed’s bond-buying plan.

U.S. earnings also remain in focus, with American Express, 3M, General Electric, Johnson & Johnson and Verizon due to release their quarterly results before the opening bell.

The pan European Stoxx 600 climbed 0.8 percent to 408.37 after ending at more than two-week low in the previous session.

The German DAX rallied as much as 1.4 percent, France’s CAC 40 index rose over 1 percent and the U.K.’s FTSE 100 was up 0.8 percent.

UBS shares jumped 2.2 percent after the Swiss wealth manager posted a surge in quarterly net profit and said it plans to buy back as much as 4 billion francs ($4.5 billion) of shares over the next three years.

Swedish buyout group EQT soared 13.6 percent after it agreed to take over global real estate investment manager Exeter Property Group.

Swiss drug maker Novartis lost nearly 3 percent after its fourth-quarter sales and core net income came in below estimates.

Hikma Pharmaceuticals rose over 1 percent. The company confirmed that it has entered into a non-binding term sheet with GlaxoSmithKline S.A.E., the Egyptian subsidiary of GlaxoSmithKline plc.

Aerospace company Rolls Royce slumped 9 percent after it warned of significant uncertainty over the “precise shape and timing of the recovery in air traffic”.

JD Sports Fashion lost 3.3 percent. The company announced that it is exploring additional funding options with a view to increasing its flexibility to invest in future strategic opportunities and that this may involve a non-pre-emptive equity placing.

British Airways owner IAG lost 2.8 percent and EasyJet fell 1.4 percent amid the prospect of tougher restrictions in England and other European countries.

In economic news, the U.K. unemployment rate increased and the employment rate continued to decline in three months to November, labor force survey results from the Office for National Statistics showed.

The jobless rate rose 0.6 percentage points from the previous quarter to 5 percent in three months to November. The expected rate was 5.1 percent.

At the same time, the employment rate dropped 0.4 percentage points sequentially to 75.2 percent. Employment decreased by 88,000 on the quarter.

The number of people out of work increased by 202,000 on quarter to 1.72 million in three months to November.