By Sruthi Shankar
(Reuters) - Europe's benchmark equity index hit a record high on Tuesday, recovering all of its pandemic-driven losses as investors bet on a speedy global economic recovery, spurred by bumper stimulus spending and COVID-19 vaccination programmes.
European traders returned from a long weekend to push the STOXX 600 up 0.8% to 435.7 points. It has climbed more than 60% from last year's lows and surpassed its previous all-time high of 433.90 points in February 2020.
The German DAX rose 1.1% to add to its recent record-setting rally, France's CAC 40 was up 0.6%, also fully recovering from last year's crash and UK's FTSE 100 jumped 1.2%.
Wall Street's main indexes notched all-time highs on Monday after data pointed to a strong U.S. labour market and business activity recovery, helping lift the global mood even as coronavirus cases spiked across the world. [.N]
"European equity markets have a higher percentage tilt to the more distressed cyclical and value parts of the market that performed poorly not only in 2020, but for several years before as well," Niall Gallagher, investment director for European equities at GAM wrote in a note.
"Any change in the economic environment that sees a pick-up in growth and a pick-up in inflation is likely to positively impact these sectors and as they are a higher weighting in the market, this explains the recent expectations that European equities may do better in the next few months."
Economically sensitive sectors such as banking, commodity and automakers rebounded strongly this year, boosting European stocks.
However, it took the benchmark seven months more than the U.S. S&P 500 to reclaim its pre-pandemic high, slowed down by a sluggish vaccination roll-out and a new wave of infections.
Graphic: European shares reclaim pre-pandemic levels - https://fingfx.thomsonreuters.com/gfx/mkt/qzjpqlbzovx/Pasted%20image%201617270947531.png
Miners were the top gainers on Tuesday, up 2.4%, while banks, automakers and insurers rose more than 1.0%.
Swiss bank Credit Suisse slipped 0.6% after sharp losses last week, as it announced an estimated loss of 4.4 billion Swiss francs ($4.7 billion) from its relationship with Archegos Capital Management.
UK stocks took cheer as British Prime Minister Boris Johnson said a planned reopening of the economy could take place next week. [.L]
However, British Airways-owner IAG, easyJet and Ryanair lagged wider markets as Johnson added it was too soon to say whether international summer holidays can go ahead this year.
BP jumped 2.8% after the oil major said it expects to reach its $35 billion net debt target in the first quarter of 2021.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)