Europe close: Stocks gain as US President's health improves

European shares finished higher on Monday as investors were still hopeful of a deal on a US stimulus package along with reports that President Donald Trump may be discharged from hospital soon, having contracted the coronavirus during the preceding week.

The pan-European Stoxx 600 index gained 0.81% to 365.63 with the German Dax advancing 1.1% to 12,828.31 alongside, while the FTSE Mibtel added 1.06% to 19,265.51.

A return from Trump, who tested positive last week and was taken to hospital, would eliminate fears of a potential delay in the presidential election next month.

Investors were also looking for positive news on the second stimulus package. At the end of the prior week, Nancy Pelosi, the speaker of the lower house of the US Congress, asked airlines not to furlough their employees as more support is imminent.

“We saw some serious gains for US airlines such as American Airlines and United. The US airline sector is likely to remain highly volatile this week, and if the second stimulus aid package becomes a reality, we will not only see the airline stocks skyrocketing, but the US stock market will also rise,” said Avatrade chief market analyst Naeem Aslam.

Investors were also digesting a mixed bag of eurozone services sector PMI data. Spanish, Italian and French readings all showed negative growth in September, while Germany’s reading of 50.6 was the highest in the bloc, even though it fell from the 52.5 posted in August.

The UK services PMI update was 56.1 – the best in Europe, “but then again the UK economy reopened after the economies of mainland Europe”, said CMC Markets analyst David Madden.

In corporate news, shares in Cineworld plunged almost 36% as the company confirmed it would temporarily suspend operations at all of its UK and US theatres from Thursday due to the Covid-19 pandemic.

The company cited an "increasingly challenging theatrical landscape and sustained key market closures" adding that the move would hit 536 Regal theatres in the US and 127 Cineworld and Picturehouse theatres in the UK.

Oilfield equipment and services outfit, Bloomberg Weir Group topped the risers after selling its oil & gas unit to US-based Caterpillar £314m. The company said that the transaction continued its transformation into a premium mining technology 'pure play' with the new funds enhancing its flexibility to invest in future growth opportunities.

German fertiliser group K+S jumped 16% as Bloomberg reported it was in advanced talks to sell its Morton Salt unit to Kissner Group for about $3bn.

Dufry surged 19% after it revealed that China's Alibaba planned to acquire a stake of up to 9.99% in the Swiss duty free group.

Shares in Suez fell as Veolia said on Sunday that it would not launch a hostile after buying Engie SA's stake in the water-and-waste management company, and Suez's board would have to agree to any public takeover bid.