Investors pushed stock markets higher on Friday on continued optimism over vaccines and signs of progress on a new US stimulus, though surging infections and deaths highlighted the painful reality of the coronavirus crisis.
In foreign exchange, the pound held its own even as European doubts over a post-Brexit trade deal with Britain boiled over.
France has threatened a veto as intense negotiations entered what could be their final hours.
The dollar gained against the euro and yen even though US jobs data showed the world’s biggest economy added just 245,000 new jobs in November, far fewer than analysts had expected.
“The soft employment report though is seen as a positive for stocks since it ought to incentivise Congress to pass a stimulus bill this year,” said Neil Wilson, chief market analyst at Markets.com.
Brent crude oil briefly reached its highest level since March, close to $50 a barrel, after Opec and its oil-producing allies struck a deal on Thursday to offer flexibility over changes to production in the coming months.
But “obvious divisions between members of the group mean the question marks over the future direction of oil supply are as large as ever,” said Caroline Bain, chief commodities economist at Capital Economics.
Meanwhile “there’s plenty of enthusiasm around at the moment, whether that be vaccine results or stimulus talks on Capitol Hill,” noted Oanda market analyst Craig Erlam.
“For the first time this year, things are looking up and that optimism can be felt throughout these markets.”
While the consensus is that next year the world can begin returning to normal as people are inoculated, observers warn that lockdowns and other containment measures currently in place are crippling businesses and jobs.
The United States recorded more than 210,000 new cases in a 24-hour stretch to Thursday evening, and more than 2,900 deaths, according to Johns Hopkins University.
Italy registered 993 deaths, an all-time high.
The figures reinforce the need for governments to maintain restrictions that hobble economic activity.
Attention also focused on Washington as US lawmakers appeared to be inching towards an agreement on more stimulus before the Christmas break.
Democratic leaders have backed a $908bn bipartisan proposal as a starting point for discussions and some top Republicans are warming to the idea.
Wall Street stocks rose modestly in early trading Friday, with the Dow Jones Industrial Average up 0.4%.
The blue-chip FTSE 100 rose 0.9%, with BP and Royal Dutch Shell among the biggest gainers as major oil producers agreed to continue production cuts to overcome coronavirus-induced demand concerns.
The FTSE 100 has soared 17% in the past five weeks as news that a working Covid-19 vaccine would be available before year-end sparked hopes of a swift economic recovery, but analysts have cautioned about the near-term damage to the economy from sweeping business restrictions.
Data on Thursday showed activity in the UK services sector in November suffered its first fall since June following a four-week partial lockdown across England.
The mid-cap FTSE 250, considered a barometer of Brexit sentiment, rose 0.3%, led by the real estate, technology and consumer staples sectors.
Brexit trade talks are in a difficult phase and a deal can only be struck if the European Union accepts that Britain is a sovereign nation, a British minister said on Friday after London indicated the chance of a breakthrough was receding.
“For UK stocks, it may well be that Brexit progress ignites a new bounce, but then it might do the same for sterling, dampening down enthusiasm for UK stocks at precisely the moment that they might be expected to shine,” said Chris Beauchamp, chief market analyst at IG.
“At present the market just seems happy to take any deal…but even without one, the hints about carrying on negotiations in January provides hope that there won’t be a cliff-edge moment to kick off 2021, just yet more interminable talking.”
McBride Plc jumped 7.3% after raising its full-year earnings outlook, while Housebuilder Berkeley Group shed 1.8% as it posted a fall in first-half profit.
In London, the FTSE 100 closed up 0.9% to 6,550.23 points; Frankfurt — DAX 30 ended up 0.4% to 13,298.96 points; Paris — CAC 40 closed up 0.6% to 5,609.15 points and EURO STOXX 50 ended up 0.6% to 3,539.27 points on Friday.