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* UK midcap stocks hit record high
* Deliveroo inches up as retail investors join trading
* French power group EDF leads STOXX 600 gains (Adds comment, updates prices)
By Sruthi Shankar
April 7 (Reuters) – European stocks hovered near record highs on Wednesday supported by gains in real estate and telecom shares, while optimism over speedy vaccination drives and a weaker pound helped UK equities outperform.
The pan-European STOXX 600 index was flat, trading just below the record closing high of 435.26 points on Tuesday.
UK’s exporter-heavy FTSE 100 gained 0.7% as a weaker pound lifted the dollar earners, while the domestically focussed midcap index hit a record high as Britain began the roll-out of Moderna’s COVID-19 vaccine.
A rebound in economically sensitive sectors such as banks, energy and automakers pushed European stocks to pre-pandemic levels earlier this week, as investors bet on a strong global economic recovery, driven by vaccines and unprecedented stimulus measures.
A final reading of IHS Markit’s Purchasing Managers’ Index showed euro zone business activity returned to growth in March, underpinned by a record expansion in the manufacturing sector and as the service industry coped with new lockdowns better than expected.
“There is a case to be made in the second half of the year when Europe really has its moment, because it has lagged the rest in its recovery. They’ve finally managed to ramp up vaccine production and distribution,” said Julien Lafargue, head of equity strategy at Barclays Private Bank.
With earnings season set to kick off this month, investors are hoping for a strong recovery.
Profits for companies on the STOXX 600 are expected to jump 47.4% in the first quarter versus beaten-down numbers a year earlier, according to Refinitiv IBES data.
Recent UK market debutant Deliveroo Holdings rose 2.9% to 288 pence in its first day of unrestricted trading when retailers were allowed to trade. It has shed almost 28% since last week when it priced its initial public offering at 390 pence.
French M&A was also in focus, with power group EDF jumping 7% to the top of STOXX 600, after sources told Reuters the government expects to spend around 10 billion euros ($11.87 billion) to buy out minority shareholders as part of a proposed restructuring of the company.
Amundi rose 2.1% after Societe Generale said it was in exclusive talks to sell most of asset manager Lyxor to Amundi for 825 million euros ($979 million). (Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)