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European shares rally as trade optimism outweighs political concerns

Credit: REUTERS/STAFF

European shares saw broad-based gains on Thursday, rallying after encouraging comments from China on trade with the United States came as a welcome relief amid growth worries and political turmoil.

By Susan Mathew

Sept 26 (Reuters) - European shares saw broad-based gains on Thursday, rallying after encouraging comments from China on trade with the United States came as a welcome relief amid growth worries and political turmoil.

The optimism seemed to outweigh concerns about impeachment surrounding U.S. President Donald Trump which pushed Wall Street into the red. London's blue-chip index .FTSE jumped 0.8% percent despite heavy falls in some stocks. .N.L

The pan-European STOXX 600 index .STOXX closed up 0.6%, after weak purchasing managers' surveys, worries about Britain's exit from the European Union and the impeachment probe into Trump had pressured the index over the last three sessions.

"What we see is just market expectations, it is purely micro management of the market," said Stephane Barbier de la Serre, Macro Strategist, Makor Capital Markets SA.

"They sold yesterday and they are buying back. It is very much algorithm trading."

Trade optimism was spurred by Beijing saying it's in close communication with Washington and preparing to make progress at trade talks in October. This came after Trump's overnight comment that a Sino-U.S. trade deal could happen sooner than expected.

Although investors are keeping a close watch on U.S.-China trade moves, they are starting to price in the possibility of trade negotiations continuing for a long time, and are nearing the point of growing immune to developments on this front, analysts say.

"If none of the external shocks hitting global manufacturing and trade get much worse than it is already, households and companies are likely to get used to the noise and risks over time," wrote Holger Schmieding, chief economist at Berenberg.

Healthcare stocks were among the biggest gainers on the day after rating agency Moody's said drugmakers with a major presence in China would benefit from the country's growing demand for drugs.

AstraZeneca Plc AZN.L, Novartis NOVN.S and Roche Holding AG ROG.S rose between 0.7% and 1.5%.

Belgian supermarket chain Colruyt COLR.BR jumped 7.6% after a better than expected net income forecast.

Some London-listed stocks saw steep declines after issuing profit warnings. Education company Pearson PSON.L and tobacco company Imperial Brands IMB.L both dropped more than 12%, while cruise operator Carnival Corp CCL.L gave up 7.2%.

Dutch bank ABN Amro ABNd.AS was also among the biggest drags on the pan-region index, hit by a money laundering investigation.

(Additional reporting by Joice Alves in London; Editing by Bernard Orr and Mark Potter)

((Shreyashi.Sanyal@thomsonreuters.com; +1 646 223 8780))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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