By Carla Mozee, MarketWatch
European stocks finished higher for a third session in a row Tuesday as investors bet the U.K. will vote to remain in the European Union in Thursday’s key referendum.
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.41% gained 0.7% to close at 340.04 after darting between small losses and gains. The index on Monday rallied 3.7%, its largest rise in nearly 10 months.
Monday’s sharp advance came after two weekend polls indicated growing support for the U.K. to stay in the European Union, ahead of a referendum on the issue on Thursday.
More polls released late Monday were mixed. An ORB survey showed the “remain” camp ahead, while a YouGov poll put the “leave” group up by two percentage points, at 44% versus 42%.
However, analysts were still confident the Brits will vote to remain in the EU.
“While polls continue to show a tight race, betting markets suggest a 70% or better chance that the U.K. will opt to remain in the EU,” said Eric Lascelles, chief economist at RBC Global Asset Management, in a note.
“Historically, voters in referendums indeed select status-quo outcomes such as this most of the time. That said, we figure the risk of Brexit is higher than the market imagines, though still comfortably below 50%,” he added.
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In the closely watched banking sector, shares of Banco Comercial Português SA /zigman2/quotes/209833184/delayed PT:BCP -1.35% were down 7.5% and Banco Popular Español SA dropped 1.5%. But Commerzbank AG /zigman2/quotes/200193353/delayed DE:CBK +1.44% gained 1.3% and BNP Paribas SA /zigman2/quotes/206351084/delayed FR:BNP +1.06% picked up 1.1%.
European Central Bank President Mario Draghi, during afternoon trade, said the central bank is prepared to act if a Brexit sparks financial turmoil. Draghi appeared in Brussels before the European Parliament’s Committee on Economic and Monetary Affairs.
Before his testimony, Germany’s top court ruled the ECB’s unlimited bond-buying program, known as OMT, which was created at the height of the European debt crisis, complies with German law.
Also in afternoon trade, Federal Reserve Chairwoman Janet Yellen, in congressional testimony, said a Brexit poses significant risk to the U.S. economy and global financial market stability.
France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.56% rose 0.6% to 4,367.24 after opening lower. Italy’s FTSE MIB gained 0.5% at 17,431.17. Spain’s IBEX 35 /zigman2/quotes/210597995/delayed XX:IBEX +1.06% flipped higher, up 0.2% to 8,667.30.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.4113% was buying $1.1256 compared with $1.1315 late Monday. The shared currency was little changed after the closely watch ZEW survey showed economic expectations in Germany jumped in June.
Movers: Shares of Kion Group AG /zigman2/quotes/209291551/delayed DE:KGX -0.74% dropped 6.9% after the German supplier of forklift trucks and warehouse equipment said it is buying U.S. logistics company Dematic Corp. for around $2.1 billion.
Whitbread PLC shares /zigman2/quotes/207954631/delayed UK:WTB -0.97% climbed 1.7% after the company behind the Premier Inn hotel company and the Costa coffee chain posted growth in first-quarter sales.
AXA SA shares /zigman2/quotes/202169431/delayed FR:CS -0.28% were up 1.3% as the French insurer, in its strategic plan for the next four years, said it is cutting costs and plans to expand in higher-growth countries. Record-low interest rates have hurt earnings of AXA and other insurers.
Platinum and copper producer Anglo American PLC /zigman2/quotes/201381512/delayed UK:AAL -0.04% lost 1.8%. Anglo American is the majority owner of Anglo American Platinum Ltd. /zigman2/quotes/204578911/delayed ZA:AMS -0.99% , which on Tuesday warned that first-half net earnings will likely drop at least 20% compared with the year-earlier period.