By Shreyashi Sanyal
(Reuters) - European shares bounced back on Wednesday, on the eve of the European Central Bank's policy meeting, as AstraZeneca (NYSE:AZN) reversed declines after a report that it may resume its COVID-19 vaccine trial next week.
AstraZeneca Plc (L:AZN) had to pause global trials of its experimental vaccine after an unexplained illness in a participant. But its shares rebounded from small declines earlier in the session to inch 0.5% higher after the Financial Times report.
"Given how brash the markets have been around any vaccine updates, this understanding that delays in the process aren't necessarily cause for concern is a surprising acknowledgement of nuance," said Connor Campbell, financial analyst at spread better Spreadex.
The pan-European STOXX 600 index (STOXX) rose 1.6%, with telecoms (SXKP), insurers (SXIP) and technology stocks (SX8P) leading sectoral advances.
Travel and leisure stocks (SXTP) were the laggards with a 0.9% fall.
The British airline easyJet (L:EZJ) fell 2.1%, a day after reducing its flying schedule as frequent changes in government travel restrictions hit demand.
Fellow airlines Ryanair (I:RYA) and IAG (L:ICAG) and cruise operator Carnival (L:CCL) fell between 3.5% and 6%.
The plane manufacturer Airbus (PA:AIR) fell 2% after deliveries slipped in August, slowing its recovery from a meltdown in demand induced by the coronavirus.
The STOXX 600 index has been stuck in a tight range since June, but investors are looking to Thursday's ECB policy meeting as a possible catalyst.
Analysts are not expecting any changes in rate policy, focusing instead on the central bank's inflation outlook and commentary on the euro's recent strength.
"We believe the ECB will try to address the downside risks to inflation and recent euro appreciation through words rather than actions at this point," wrote analysts at TD Securities.
Investors were following developments around Britain's plan for life outside the European Union's single market from Jan. 1 as the UK published legislation that it acknowledged would break a binding agreement with the EU, casting a dark shadow over the latest round of talks on a free trade agreement.
Expectations for third-quarter STOXX 600 earnings have worsened, according to the latest data from Refinitiv.
Profits are now expected to fall 39.2% for the 600 companies listed on the pan-European index, against an expectation of 37.9% a week ago.