Europe close: Stoxx 600 hits four-month high as banks gain

(Sharecast News) - European stocks rose for the fifth straight day on Tuesday, pushing the Stoxx 600 to within a whisker of its all-time closing high, as strong gains in the banking and travel sectors provided a boost. Investors were also digesting a wave of newsflow from Donald Trump's first day in office as America's new president, where he refrained from imposing any tariffs on European countries - for now, at least - focusing instead on new protectionist measures against Mexico and Canada.

Despite an earlier subdued performance, the Stoxx 600 managed to finish the day 0.4% higher at 525.93, its highest level since reaching a record of 528.08 on 27 September. The index has gained 3.5% over the past five days alone.

In economic news, the headline ZEW Indicator of Economic Sentiment, which measures confidence among institutional investors in Germany, fell to just 10.3 in January, down from 15.7 in December and firmly below the consensus forecast of 15.4.

In the UK, figures released earlier by the Office for National Statistics showed that the unemployment rate and wages grew in the three months to November. The unemployment rate rose to 4.4% from 4.3%. Meanwhile, average earnings including bonuses grew 5.6% on an annual basis, up from 5.2% and in line with consensus forecasts.

Meanwhile, new car sales in the EU grew 5.1% year-on-year to 910,505 in December, with a 28.8% surge in registrations in Spain making up for more tepid growth in France and big declines in Germany and Italy.

Banks and travel stocks up, wind stocks down

Online bank Avanza was a high riser in Stockholm, jumping 13% after beating expectations with its fourth-quarter results. Revenues jumped 20% to SEK1.06bn, ahead of the SEK1.01bn forecasts, while lower-than-expected costs helped the bottom line come in ahead of estimates.

Lloyds and Bank of Ireland gained on the back of news that UK chancellor Rachel Reeves is stepping in to protect lenders from multibillion-pound payouts in the car finance mis-selling case. Shares in smaller peer Close Brothers surged 22%.

Others in the European banking sector were also performing well, such as HSBC, BNP Paribas and Barclays.

Travel stocks were also in demand as oil prices dropped, with TUI, IAG, Wizz Air and Deutsche Lufthansa putting in decent gains. Brent was down around 1% by the close at $79.43 a barrel - its lowest level in more than a week.

While the delay of Trump's proposed tariffs on European imports was welcome to some, the news of a freeze on new leases for offshore wind farms in the US hammered stocks in the renewable energy sector - along with Trump's announced withdrawal from the Paris climate agreement.

Danish wind farm developer Ørsted, which on Monday took a huge £1.4bn impairment on its US business, tumbled 11%, while Vestas Wind Systems, EDP Renovaveis, EDP-Energias de Portugal and Acciona also dropped.