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03 Feb 2021 | 12:03

Europe midday: Italy shares rally on hopes 'Super Mario' can form govt

(Sharecast News) - European shares maintained gains for the third straight session as Italian shares outperformed on hopes former European Central Bank chief Mario Draghi would agree to form a unity government. The pan-European Stoxx 600 index was up 0.60%. Italy's FTSE MIB outperformed with a 2.54% as investors were cheered by the prospect of the technocrat taking charge of the nation's response to the Covid-19 pandemic.

"He's a highly skilled operator, a consummate politician and we know he'll do 'whatever it takes' to steer Italy out of its worst economic and health crisis since the war," said analyst Neil Wilson.

"As far as technocrats go, you won't find a better one. Italian banks like the idea of Draghi as PM - shares rose 6% in the major names. His expertise in this area is clearly a positive. Italian 10-year bond yields sank 7 basis points to 0.585. I think many of us who watched every ECB presser for the last decade will think Italy has secured a top operator."

The news spilled over into equities, with Italian stocks among the major gainers. Unicredit, Intesa Sanpaolo, Poste Italiane, Banco BPM and Atlantia were all higher.

Elsewhere, shares in German telecoms group Freenet soared after the company announced another €135m share buyback and special dividend payment.

Vodafone rallied as it said it was confident about the full-year outlook after its German business drove a return to organic growth in the third quarter.

Aviva advanced after an upgrade to 'overweight' at Morgan Stanley, while Upper Crust owner SSP was boosted by an upgrade to 'buy' at Berenberg.

On the downside, Unite Group fell after it announced a three-week extension to its 50% student discount and said the move would cost it £6m in lost revenue. It was also hit by a downgrade to 'underweight' at Barclays.

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