US tax bill delivers shot in the arm for European shares

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Europe

European stocks rallied on Monday after the US Senate passed a tax package delivering significant fiscal stimulus, which investors have been anticipating would give extra legs to the bull run in equity markets.

The tax overhaul delivered some relief in early European trading after benchmarks hit multi-week lows on Friday.

Strong gains in the US dollar helped Germany's dollar-exposed shoot up from a two-month low, last up 1.1 percent. The euro's strengthening has weighed on earnings expectations for stocks across the euro zone this quarter.

The sweeping tax overhaul that passed the US Senate on Saturday contains the Republicans’ biggest blow. /Reuters Photo

Bank stocks .SX7P, seen as the biggest beneficiaries of tax cuts, led gains, up 0.9 percent on the day.

The pan-European STOXX 600 gained 0.7 percent while euro zone blue chips jumped 0.8 percent, set for their best gains in five weeks.

Autos stocks, which also have large exposures to the US shot higher with Fiat Chrysler leading Italy’s FTSE MIB, up 3.2 percent.

Elsewhere dealmaking moved some stocks. Denmark’s largest insurer Tryg jumped 3.9 percent after agreeing to buy unlisted competitor Alka Forsikring.

Italian cable maker Prysmian meanwhile fell 2.9 percent after agreeing a 30 US dollars per share all-cash deal to buy Kentucky-based rival General Cable.

Chinese stocks closed mixed on Monday, with the benchmark Shanghai Composite Index down 0.24 percent, at 3,309.62 points. The Shenzhen Component Index closed 0.01 percent higher at 11,014.55 points. /VCG Photo

While, Chinese stocks closed mixed on Monday, with the benchmark Shanghai Composite Index down 0.24 percent, at 3,309.62 points.

The Shenzhen Component Index closed 0.01 percent higher at 11,014.55 points. The ChiNext Index, China's NASDAQ-style board of growth enterprises, lost 0.38 percent to close at 1,797.77 points.

Combined turnover on the two bourses stood at 407.3 billion yuan (about 61.5 billion US dollars), up from 387.7 billion yuan the previous trading day.