European equities rose, led by banks, after a decisive Democratic midterm showing reduced some market uncertainty and bond yields fell. The Stoxx Europe 600 banks index jumped as much as 4.5%, poised for its biggest single-day gain since May. Wednesday’s rally reverses a sharp pre-election selloff: earlier US and European yield spikes had stoked credit-quality and default concerns and the sector had pulled back after hitting record highs in early September. The banks sector remains up about 11%

European equities rose, led by banks, after a decisive Democratic midterm showing reduced some market uncertainty and bond yields fell. The Stoxx Europe 600 banks index jumped as much as 4.5%, poised for its biggest single-day gain since May. Wednesday’s rally reverses a sharp pre-election selloff: earlier US and European yield spikes had stoked credit-quality and default concerns and the sector had pulled back after hitting record highs in early September. The banks sector remains up about 11% year-to-date. Berenberg head of multi-asset strategy and research Ulrich Urbahn said: "Despite strong fundamentals, banks' risk exposure ahead of the midterms had clearly fallen. With uncertainty easing, the market is now seeing a strong risk-relief rebound. It's a classic 'sell the rumor, buy the fact' trade."