European stocks rebound on signs from bond market, vaccination-led optimism

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European stocks bounced on Monday after sharp losses last week as a selloff in bond markets eased, while optimism over Covid-19 vaccination programme and US stimulus package further aided sentiment.

The pan-regional STOXX 600 index rose 1.6 per cent by 08:11 GMT following strong gains in Asian stocks despite weaker-than-expected manufacturing activity data out of China.

The European equities benchmark fell to a near one-month low on Friday as investors grew fearful that rising inflation due to another large U.S. stimulus package and the re-opening of the global economy could drive major central banks to tighten monetary policy.

The German DAX rose 1.3 per cent, while France's CAC 40 and UK's FTSE 100 gained 1.5 per cent each.

Miners, up 2.2 per cent, were the top sectoral gainers, while travel & leisure and retail stocks jumped over 2 per cent.

British Airways-owner IAG was the top gainer on STOXX 600, jumping 5.4% after Peel Hunt upgraded the stock to "buy" on expectations of a rebound in travel demand during summer.

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