By Sruthi Shankar

(Reuters) – European stocks rose on Tuesday as strong earnings from wealth manager UBS and auto parts maker Autoliv added to a string of upbeat corporate updates, while the International Monetary Fund raised its forecast for global growth in 2021.

The pan-European STOXX 600 index closed up 0.6%, with a rally in automakers, industrial companies and SAP and helping the German DAX outperform.

UBS rose 2.4% as high levels of client activity helped the world’s largest wealth manager record a 137% rise in net profit.

The broader financial services index gained 1.8%, with Swedish buyout group EQT jumping 14.6% after it signed a deal to buy global real estate investment manager Exeter Property Group for $1.87 billion.

The STOXX 600 tumbled to a two-week low on Monday after data painted a gloomy picture of Europe’s economy in January as many countries tighten curbs to combat new variants of the coronavirus.

“The numbers that are coming out show economic activity in Europe is falling back and underperforming other parts of the world,” said David Miller, investment director at Quilter Cheviot.

“So far, investors are prepared to look through the current difficulties on the basis that second half will be better.”

Supporting the sentiment, the International Monetary Fund raised its forecast for global economic growth in 2021 and said the coronavirus-triggered downturn in 2020 would be nearly a full percentage point less severe than expected.

Italy’s FTSE MIB rose 1.2% after Prime Minister Giuseppe Conte handed in his resignation to the head of state, hoping he would be given an opportunity to put together a new coalition and rebuild his parliamentary majority.

Conte lost his absolute majority in the upper house Senate last week when a junior partner, the Italia Viva party quit in a row over the various issues.

Boosting Milan’s bourse, UniCredit jumped 4.5% after reports it set to appoint Andrea Orcel, one of Europe’s best known investment bankers, as its new chief executive.

Sweden’s Autoliv gained 5.3% after it reported higher than expected quarterly earnings, boosted by a recovery in car production.

Industrial gas producer Linde rose 3.5% after announcing an increase to its quarterly dividend and a $5-billion share buyback programme.

Spanish pharmaceutical company PharmaMar surged 21.1% after peer review journal Science published a paper that confirmed its drug plitidepsin has a “potent preclinical efficacy” against the COVID-19.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur and Lisa Shumaker)

By Shashank Nayar and Amal S

(Reuters) – British stocks ended higher on Tuesday after drugmaker AstraZeneca denied reports that its COVID-19 vaccine was less effective in the elderly population, while Indivior surged after its former parent withdrew a $1.4 billion legal claim.

The blue-chip FTSE 100 index climbed 0.2%, with automakers and healthcare stocks leading the gains, while the mid-cap index rose 0.5%.

However, weakness in general retailers limited gains after British retail sales suffered their biggest annual drop since May this month, suggesting the latest lockdown is taking a heavy toll on many shops.

The mood was also dampened by a jump in Britain’s unemployment rate to 5.0%, its highest in nearly five years, in the three months to November.

“Even though the unemployment rate is at 5%, it was meant to go to 5.1%. So, there were positive angles to pick among the negative news and I think that seems to have benefited sentiment alongside the pound falling,” said Connor Campbell, a financial analyst at SpreadEx.

Drugmaker AstraZeneca gained 0.7% and gave the second biggest boost to the blue-chip index after it denied reports its COVID-19 vaccine was not very effective for people over 65.

The FTSE 100 has recorded consistent monthly gains since November on expectations of a vaccine-led recovery, but it has lost steam as extended lockdowns hit business activity.

The International Monetary Fund cut Britain’s growth outlook for 2021 because of a resurgence in novel coronavirus cases, and forecast it would take until next year for the economy to regain its pre-pandemic strength.

Britain’s Rolls-Royce dropped 1.8% after it downgraded expectations for how much its engines would fly this year.

Indivior leapt 13.1% to the top of the FTSE 250 index after it said late on Monday that former parent Reckitt Benckiser would withdraw a $1.4 billion claim against the company.

(Reporting by Shashank Nayar in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu and Barbara Lewis)

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The U.S. dollar fell across the board as riskier currencies found a firmer footing on Tuesday, a day after worries over vaccine rollouts and the outlook for U.S. fiscal stimulus boosted demand for safe havens.

Mounting coronavirus cases and caution ahead of the U.S. Federal Reserve’s policy meeting this week has dulled appetite for risk, lending support to the dollar against a basket of currencies in recent sessions, but investors were once again nibbling at riskier currencies on Tuesday.

The U.S. Dollar Currency Index was 0.19% lower at 90.173. The index rose as high as 90.614, its strongest since Jan. 20, earlier in the session.

The dollar appeared to be taking its cue from overall risk sentiment in the market, said Michael Brown, senior analyst at payments firm Caxton, in London.

Data on Tuesday showed U.S. consumer confidence rose moderately in January amid lingering concerns about the COVID-19 pandemic.

“There is also probably a lack of appetite to be buying the dollar before what’s likely to be another dovish Federal Open Market Committee (FOMC) meeting tomorrow,” Brown said.

Few if any changes are expected to the Fed’s policy statement on Wednesday after its two-day meeting and no new economic forecasts are scheduled to be released.

Despite the dollar’s recent rebound from multi-year lows, speculators in the currency market remain extremely bearish on the U.S. currency.

(GRAPHIC: Down on the dollar – https://fingfx.thomsonreuters.com/gfx/mkt/rlgpdgadzvo/Pasted%20image%201611673686398.png)

Traders are also keenly watching progress on the U.S. stimulus front after U.S. Senate Majority Leader Chuck Schumer said Democrats may try to pass much of President Joe Biden’s $1.9 trillion spending package with a majority vote, but it is not clear if they have the numbers to override Republican objections.

The euro was higher on the day, but gains were muted amid early signals that the economy may not rebound as strongly this year as predicted. Germany’s Ifo business climate indicator undershot expectations on Monday and an economic surprise index in Europe is near six-week lows.

On Tuesday, the Australian dollar – seen as a liquid proxy for risk – was 0.48% higher against the dollar; the New Zealand dollar was up 0.65%.

Elsewhere, emerging-market currencies saw an easing of recent selling pressure with the Brazilian real rising more than 1%.

Sterling pulled away from a one-week low against the dollar and also gained ground against the euro as rebounding risk appetite in broader asset markets weakened the U.S. currency.

(Reporting by Saqib Iqbal Ahmed; Editing by Bernadette Baum)