BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European markets closed on a strong note on Wednesday, buoyed by the European Commission's plan to launch a massive recovery fund for the euro region to help limit the damage inflicted by the coronavirus pandemic.
The European Commission's move comes close on the heels of last week's proposal from Germany and France regarding raising a common European debt to help the region's economic recovery.
The European Commission announced a €750 billion ($821 billion) aid package to help the EU recover from the coronavirus pandemic. The plan will have to be backed by all 27 nations in the bloc.
In a statement on its website, the EU governing body proposed the creation of a new recovery instrument, dubbed Next Generation EU, to address the economic damage caused by the outbreak.
According to the statement, Next Generation EU will consist of €750 billion as well as targeted reinforcements to the long-term EU budget for 2021-2027, and will bring the total financial firepower of the EU budget to €1.85 trillion. The recovery fund would be embedded within the next long-term EU budget, it added.
France and Germany last week proposed a set-up for a 500 billion-euro ($547 billion) fund to aid recovery efforts.
The pan European Stoxx 600 ended up 0.24%. Among the major indices in Europe, the U.K.'s FTSE 100 gained 1.26%, Germany's DAX climbed up 1.33% and France's CAC 40 advanced 1.79%, while Switzerland's SMI tumbled 1.16%.
Among other markets in Europe, Austria, Belgium, Finland, Greece, Spain, Sweden and Turkey ended sharply higher.
Czech Republic, Ireland, Norway and Portugal posted modest gains. Denmark declined sharply. Netherlands, Poland and Russia ended modestly lower.
In the U.K. market, TUI soared 15.5% amid prospects of lifting of travel restrictions in Europe.
Melrose spurted 12% and Meggitt surged up 10.5%. M&G, Rolls-Royce Holdings, St. James, British Land Company, Barclays, Carnival and Standard Life gained 7 to 10%.
Royal Bank, EasyJet, IAG, Hiscox, Lloyds Banking Group, JD Sports Fashion, Coca-Cola, Aviva and Bunzi closed stronger by 5 to 6.75%.
On the other hand, Barratt Developments, AstraZeneca, Ocado Group, Aveva and Ashtead Group declined sharply.
In Germany, Daimler rallied nearly 9%, Covestro surged up 6.7% and BMW gained nearly 5%. Continental, BASF, HeidelbergCement, Deutsche Bank, Allianz, Wirecard, Volkswagen and Beiersdorf climbed up 2.5 to 4.5%. Volkswagen, Deutsche Post and Deutsche Telekom also rose sharply.
Infineon Technologies shares tumbled nearly 5%. Merck and Fresenius Medical Care lost 2.5% and 2.3%, respectively.
In the French market, Renault zoomed nearly 18%. BNP Paribas surged up 8.8%, while Publicis Groupe and Societe Generale gained 7.2% and 6.5%, respectively. Credit Agricole, Michelin, Peugeot, Essilor, Unibail Rodamco, Sodexo, Kering, Vinci and Engie also ended sharply higher.
STMicroElectronics tumbled more than 5%. Worldline, Airbus Group and Capgemini were the other major losers in the CAC 40 index.
Data from the statistical office Insee showed French consumer confidence weakened to a 16-month low in May as households were concerned about general economic conditions amid coronavirus pandemic.
The consumer sentiment index fell to 93 in May from 95 in April. The score remained well below its long-term average of 100. This was the lowest since January 2019, when the score was 92.
European Central Bank President Christine Lagarde said the euro area economy is likely to contract as much as 12 percent in 2020 as member countries struggle to emerge from the coronavirus pandemic.
The currency bloc had contracted 3.8 percent in the first quarter, which was the biggest contraction since the series began in 1995.
In March, the ECB had launched a new EUR 750 billion Pandemic Emergency Purchase Programme to combat the risks posed by coronavirus, or Covid-19.
The governing council of the ECB meets next on June 4. The bank will update its outlook for both growth and inflation next week.
Copyright RTT News/dpa-AFX