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30 Mar 2021 | 11:17

Europe midday: Shares hold gains as Archegos worries ease

(Sharecast News) - European shares held gains at lunchtime on Tuesday as investors shrugged off worries over the troubles at Archegos Capital and focused on the prospects of a post Covid pandemic economic recovery. The pan-European STOXX 600 index rose 0.53% by with all major regional bourses on the rise. Britain's FTSE 100 outperformed, gave up some territory having been up up 0.76% at the opening, to be 0.41% higher. A 0.72% increase in Germany's DAX sent the index past 14,900 for the first time.

Investors were also cheered by the refloating of the Ever Given container ship that had blocked the Suez canal, allowing the backlog of cargo in hundreds to start moving through the vital shipping channel.

AJ Bell investment director Russ Mould said this was allowing markets to focus on US President Joe Biden's latest plan to revive the US economy with "a massive wad of infrastructure spending".

However, he warned there "could also yet be sting in the tail from the Archegos affair - episodes involving over-leveraged hedge funds often wreak more damage than first anticipated".

"A key focus is likely to be the efforts to tackle a third wave of Covid-19 in mainland Europe and global progress on the rollout of vaccines. The problem for markets is that recovery brings with it other risks - notably inflation - while clearly a renewed pandemic-inspired downturn would also be bad news for stocks."

Swiss lender Credit Suisse fell 1.72% after a 14% slump on Monday as the bank warned of "highly significant and material" losses after the fund, named by sources as Archegos, defaulted on margin calls.

Spanish mobile phone mast operator Cellnex rose about 1.5% after it launched a €7bn capital raise.

Shares in British letter and parcel carrier Royal Mail were up more than 2.16% as the company announced a one-off dividend and said it planned to more than double profits at its GLS parcels division in the next five years thanks to a boom in online shopping during the coronavirus pandemic.

Water group Pennon fell as the company said it was on track to deliver "resilient financial results" in line with management expectations.

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