European stocks on Tuesday rallied on optimism over the possibility of a deal for an agreed Brexit pact as well as better-than-forecast U.S. earnings.
After losing 0.49% on Monday, the Stoxx Europe 600 SXXP, +1.11% ended 1.1% higher to 394.02, its best level since May 22, 2018. Banks and insurers led the advance.
U.K. banks switched directions for a third straight session, this time rising, as they trade on the relative prospects of an agreed deal for Britain to exit the European Union. Lloyds Banking Group LLOY, +5.24% and the Royal Bank of Scotland RBS, +5.07% rose as Michel Barnier, the top EU negotiator, said a deal was possible this week, and Bloomberg News reported negotiators were closing in on a draft deal. The pound GBPUSD, +0.9916% surged to nearly $1.28.
A number of U.S. companies reported better-than-forecast earnings, including JPMorgan Chase and Johnson & Johnson, sending the Dow industrials DJIA, +0.95% higher.
The worst Stoxx 600 component was Wirecard WDI, -12.63% , which lost 16% as the Financial Times reported that internal documents appeared to show the company was trying to inflate profit and revenue at an Irish and Dubai subsidiary.
Wirecard said it “categorically rejected” the allegations, which it called “a compilation of a number of false and misleading allegations.”
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