The pan-European STOXX 600 rose 1.7%, recovering from a sharp sell-off in the previous session that had sent it to a seven-week low. The index ended November with a 2.6% drop and is 4% away from the record high it hit in the middle of last month. [MKTS/GLOB]
"Europe was already imposing lockdowns before Omicron. Since valuations are still elevated, earnings need to do the heavy lifting from here; that task has now become harder in the EU .... relative to the U.S.," TS Lombard research head Andrea Cicione said.
A recent Reuters poll of strategists and brokers suggests that European stocks may hit record highs in 2022, boosted by a recovery in corporate profits.
The poll also says that Germany's DAX and France's CAC 40 indexes would hit uncharted peaks by mid-2022, while the STOXX 600 would gain 7% and reach 500 points by July.
"In the short term, uncertainty and therefore market volatility will continue until we get greater clarity on the resistance to vaccines and the lethality and transmissibility of Omicron," TS Lombard's Cicione said.
Industrial stocks were the biggest boost to the STOXX 600 on Wednesday. Among sectors, autos as well as travel and leisure rose 3.8% and 3.1%, respectively.
Miners gained 2.3% after copper prices rebounded on easing concerns about the Omicron coronavirus variant, while oil stocks jumped 2.1% as crude prices rose as OPEC meets. [MET/L] [O/R]
The European Union could greenlight COVID-19 vaccines tailored to target the new variant in three to four months, the region's drug regulator chief Emer Cooke said on Tuesday, adding that existing shots would continue to provide protection.
A survey showed manufacturing growth in the euro zone accelerated slightly last month, but supply chain bottlenecks worsened.
Among individual stocks, Husqvarna, the world's biggest maker of power gardening tools, jumped 5.4% after raising its overall financial targets and growth ambitions for robotic lawn mowers and other battery-powered products.
Italy's Banca Monte dei Paschi di Siena surged 16.7% after saying it had begun a dialogue with the Ministry of Economy and Finance to restart discussions on its plans to raise capital.
Battered German property group Adler's shares surged 34.5%, pulling up from all-time lows, after announcing divestitures.
(Reporting by Anisha Sircar in Bengaluru; Editing by Arun Koyyur, Shounak Dasgupta and Anil D'Silva)
By Anisha Sircar and Susan Mathew