European shares highest in more than eight months

European shares shot up to a more-than-eight-month high on Monday, after Moderna Inc MRNA.O became the second drugmaker in a week to report high efficacy for an experimental coronavirus vaccine, reports Reuters.

The pan-European STOXX 600 .STOXX traded 1.5% higher by 1219 GMT after Moderna announced that its vaccine appeared to be highly effective. Pfizer made a similar announcement on Nov. 9.

“The more companies that can develop a vaccine candidate that can be shown to be effective, the more optimistic investors will be about being able to see a way out of this pandemic and for economic activity, sort of come back to some semblance of normality,” said Michael Hewson, chief market analyst at CMC Markets.

European banks .SX7P were the best performing sector, adding 4.7%. Spain's BBVA BBVA.MC topped the sector after PNC Financial Services Group PNC.N said it would buy its U.S. business for $11.6 billion in cash.

European Central Bank Vice President Luis de Guindos asked Euro zone banks on Monday to keep using their capital buffers to absorb losses without holding back credit to the real economy, which, he said, needs time to rebound from a pandemic-induced recession.

CMC’s Hewson also noted an air of caution over a post-COVID recovery, saying economic activity would not return to pre-pandemic levels overnight.

Shares of Germany's BioNtech 22UAy.F, which is developing the other vaccine with Pfizer PFE.N, fell more than 5% after Moderna's report.

Data showing that China’s factory output rose faster than expected in October and that retail sales surged had helped sentiment earlier in the day.