European shares finished Wednesday higher though Frankfurt suffered substantial losses. And the markets did trim their gains on news that manufacturing in the US had contracted more than predicted in September. European investors were nervous ahead of a US Senate vote to salvage a banking bailout plan.
Trader Gary Thomson said a failure to pass it would hit equities hard: “We need something to happen, we need a bit of confidence and a bit of clarity to come back into the financial sector and now, actually, the markets as a whole in order for us to push forward and see any form of economic growth over the coming year or two.”
Banking stocks moved erratically during the session, but benefited from hopes that a deal for Lloyds TSB to take over HBOS will go through. HBOS share rose 21%. Carmakers slid after Daimler predicted its markets will weaken.