Vaccine approval has impacted on stock rally

The European stock market rallied on Wednesday as Britain approved a COVID-19 vaccine developed jointly by AstraZeneca (LON:AZN) and Oxford University, while bets on additional US financial assistance and a massive vaccination effort raised hopes for a strong global economic recovery next year, Reuters wrote.

The pan-European STOXX 600 index rose 0.2 per cent to a 10-month high in the previous session.

AstraZeneca shares were up 1.3% after initially rising 3.3% in anticipation of the news. The drug maker said the vaccine has been approved for emergency use and involves two doses. The UK is battling a new, much more infectious variant of the virus.

It was an added boost to British markets after the UK and EU struck a Brexit trade deal last week, preventing a chaotic exit from the bloc at the end of the year. The British parliament is expected to debate and pass the deal later on Wednesday.

However, most of the region's indices traded sluggishly due to low volumes during the shortened week due to the holidays. Germany's DAX index was unchanged, while indices in France and Spain fell 0.1%.

Unicaja shares rose more than 2%, while Liberbank (MC:LBK) fell 3.6% after both banks announced an all-stock deal that would create Spain's fifth-largest bank with about 110 billion euros ($134.71 billion) in assets. Shares in HSBC (BA:HSBC), Lloyds Banking Group (NYSE:LYG) and Barclays (NYSE:BCS) were up nearly 2%, with the UK blue-chip FTSE 100 index up 0.3%.

The broader banking index is up 0.8%, but is one of the sectors with the worst performance this year along with energy, as a rise in problem loans due to the impact of the pandemic and record low interest rates has reduced the sector's appeal.

Travel and leisure sector papers rose 0.9% on average as the introduction of the COVID-19 vaccine on the continent reduced infection rates.

Meanwhile, Wall Street indexes hit record highs this week on hopes that US lawmakers will approve a big fiscal stimulus package despite delays.