EUROPE MARKETS: Spanish Stocks Settle Sharply Higher, Fronting Turnaround In European Shares

Stoxx Europe 600 rises after two days of losses

European stocks switched gears and finished higher Thursday, with Spanish stocks advancing before the results of Catalonia's regional election came in.

How markets performed: The Stoxx Europe 600 index rose 0.6% to end at 390.69, led by gains for oil and gas and basic material companies. Utilities was the sole sector finishing lower. The index's win was its first after two losing sessions.

Spain's IBEX 35 index surged 1% to close at 10,304.60, and Germany's DAX 30 index reversed course and finished up 0.3% at 13,109.74.

France's CAC 40 claimed at 0.6% rise to end at 5,385.97, and the U.K.'s FTSE 100 index charged up 1.1% to 7,603.98, a record close.

The euro was flat around $1.1867 compared with $1.1873 late Wednesday in New York.

Read:4 reasons Wall Street banks have the hots for Europe in 2018 (http://www.marketwatch.com/story/4-reasons-wall-street-banks-have-the-hots-for-europe-in-2018-2017-12-20)

Also read:European stocks set for a winning 2017, but euro's rise was a challenge (http://www.marketwatch.com/story/european-stocks-set-for-a-winning-2017-but-euros-rise-was-a-challenge-2017-12-20)

What drove markets: Spanish stocks sloughed off earlier losses and marked their first advance in three sessions. Investors were waiting to hear results from Catalonia's regional election. Officials there in October ran an referendum over whether to break away from the Spanish government. The referendum was declared illegal by Madrid, plunging the country into a constitutional crisis

"Opinion polls are showing the race to close to call," between pro- and anti-independence parties, said Fiona Cincotta, senior market analyst, at City Index, in a note Thursday. "An outright majority is still unlikely for the separatists at the moment [and] the parties haven't been able to organize themselves to join forces for this election," she said.

"The separatist drive is unlikely to recede anytime soon, however, we are also unlikely to see a repeat of the clashes on the street that we saw just a few months ago," she added.

The Spanish central government after October's referendum eventually stepped in and imposed direct rule, ousting its leaders and calling for new elections. The first exit polls of the race were due later Thursday.

Read:Spain's Catalan voters head to the polls in a too-close-to-call race (http://www.marketwatch.com/story/spains-catalan-voters-head-to-the-polls-in-a-too-close-to-call-race-2017-12-21)

Overall, European stocks on Thursday appeared to key off gains on Wall Street (http://www.marketwatch.com/story/us-stocks-seen-in-holding-pattern-as-investors-look-for-fresh-catalysts-after-tax-bill-2017-12-21), where the major indexes traded near records.

European stocks had drifted lower earlier Thursday, with analysts saying the weakness was a classic example of "buy the rumor, sell the fact," in the wake of Wednesday's passage by U.S. congressional lawmakers of a major tax-overhaul bill. U.S. President Donald Trump was expected the sign the bill into law in early January.

The bill includes a reduction in the corporate tax rate from 35% to 21%.

Stock movers: InterContinental Hotel Group PLC (IHG) rose 2.1% as parent of the Holiday Inn and Crowe Plaza chains, among others, said the U.S. tax-reform bill will cut its effective tax rate by mid- to high-single digit percentage points, starting on Jan. 1.

Steinhoff International Holdings NV , which owns the Poundland and Mattress Firm retail chains, turned higher and closed up 0.7%. The shares had collapsed further this week after the retailer on Tuesday said lenders were increasingly pulling their credit lines. Steinhoff shares have plunged 93% this year after an accounting scandal was disclosed earlier this month.

Nokia Corp. (NOK) (NOK) climbed 4% after signing a multiyear patent license agreement with China's Huawei (http://www.marketwatch.com/story/nokia-signs-patent-license-pact-with-huawei-2017-12-21) Technologies Co.

Shares of Volkswagen AG (VOW.XE) (VOW.XE) rose 0.3%, even after the auto maker's luxury car brand Audi said it's recalling 875,000 vehicles in Europe (http://www.marketwatch.com/story/audi-recalls-875000-vehicles-in-europe-2017-12-21-34852242) due to a potential heater problem that could result in fires.

Economic news: Business confidence in France's manufacturing sector dropped to 112 points (https://ww) in December from 113 points in November, coming in in line with estimates. Despite the small decline, business confidence remains well above the long-term average of 100 for the indicator.

(END) Dow Jones Newswires

December 21, 2017 13:47 ET (18:47 GMT)