European stocks surge as Brexit polls show shift to ‘remain’ camp

A rally in European stocks Monday set the market on course for its best performance in four months, after surveys showed a return in support for the U.K. to stay in the European Union.

The Stoxx Europe 600 climbed 2.6% to 334.27, the sharpest percentage gain since early February, according to FactSet data.

All sectors were higher, with bank shares fronting the advance in the financial group Royal Bank of Scotland PLC surged 7.1%, Banco Comercial Portugues SA pushed up 6.8%, Deutsche Bank AG rose 5.4%, and Lloyds Banking Group PLC picked up 5.6%.

Gains among banks helped push the U.K’s FTSE 100 up 2.2% to 6,153.87.

Shares were propelled higher after polling over the weekend showed a narrow lead in support for keeping the U.K. as a member of the EU. Britons will go to the polls in the so-called Brexit referendum on Thursday.

Polls: Among the polls, a SundayTimes/YouGov online survey poll showed 44% of respondents want to keep the U.K. in the EU, compared with 43% who want a break-up. YouGov said one-third of the responses to its Sunday Times poll came in before news of the killing of British lawmaker, Jo Cox, a vocal anti-Brexit campaigner.

Monday’s rally on the Stoxx 600 follows Friday’s rise of 1.4%, which was also led by bank shares, as investors reassessed the possibility of a Brexit in the wake of Cox’s killing.

“Despite this early-in-the-week rise, the markets still find themselves in a relatively precarious position,” said Connor Campbell, financial analyst at SpreadEx, in a Monday note.

“The slightest sign that the public are shifting in favour of Vote Leave will likely see today’s gains rapidly dissipate, while an intensification of pre-referendum nerves as the week goes on could see markets chop and change even without any new polling news,” he added.

Currencies: The pound jumped to $1.4649 from $1.4359 late Friday in New York. Sterling was on track to mark its largest one-day gain since 2009, according to CaxtonFX.

“We will likely see an extreme level of volatility this week, as all attention is focused on the referendum vote,” wrote Caxton FX analyst Nicholas Laser-Ebisch in a note.

The euro fell to 77.33 pence against the pound, from around 78.53 pence on Friday. The common currency was also buying $1.1341, from $1.1277 on Friday.

Indexes: Germany’s DAX 30 leapt 2.9% to 9,912.54, and France’s CAC 40 jumped 2.8% to 4,310.17.

Italy’s FTSE MIB moved up 2.1% to 17,283.20, while Spain’s IBEX 35 popped up 2.9% to 8,606.40.

Source: MarketWatch

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