By Shashank Nayar
(Reuters) - European shares rose for a third straight session on Wednesday as optimism around a COVID-19 vaccine offset concerns about the economic damage from surging coronavirus infections across the continent.
The pan-European STOXX 600 gained 0.5%, building on a 5% rally this week as investors bought into utilities as well as travel-related stocks, a sector that has widely underperformed this year.
Technology stocks, which have tracked a surge in their U.S. counterparts since the coronavirus-driven crash in March, gained 0.7%.
"The U.S. election, talks of fresh European stimulus, and vaccine developments have definitely helped traders to get more confident, but the market is beginning to settle and see if any new short-term risks come up," said Keith Temperton, a trader at Forte Securities.
The benchmark STOXX 600 has surged 43% since March, thanks partly to historic global stimulus, but it is still down about 7% on the year as the resurgence in COVID-19 cases threatens a nascent economic recovery.
By comparison, the U.S. benchmark S&P 500 has risen nearly 10% this year and was propelled to record highs this week after drugmaker Pfizer Inc (NYSE:PFE) said its COVID-19 vaccine was 90% effective.
Spain, which has been among the countries hit hardest by the health crisis, will get the first vaccines in early 2021, while Italy expects to receive an initial 3.4 million shots in January.
Meanwhile, the European third-quarter earnings season has been largely better than expected, with about 68% of the STOXX 600 companies that have reported so far beating estimates, according to Refinitiv data.
E.ON, Germany's largest energy firm, gained 0.3% after it said demand had recovered faster than expected from the coronavirus crisis, while maintaining its 2020 forecast.
German auto supplier Continental slid 4.1% as it warned of further restructuring expenses in the fourth quarter.
European banking stocks reversed early gains to drop 0.7% after Dutch bank ABN Amro said it remained cautious despite reporting a much better-than-expected quarterly profit. Shares of the bank tumbled almost 6%.
Nordea Bank fell 4.8% after Finnish insurer Sampo said it had sold 4% of the share capital in the bank in an accelerated bookbuild offering to institutional investors.
Among country indexes, German stocks rose 0.2%, while London's FTSE 100 and France's CAC 40 added 0.3% and 0.3%, respectively.