LONDON, April 9 — European shares rallied yesterday to erase weekly losses, while investors focused on a tight race between far-right rival Marine Le Pen and incumbent Emmanuel Macron in the runup to the first round of French presidential elections over the weekend.

Financials and commodity stocks led the gains with all major sectors in positive territory. The pan-European STOXX 600 index added 1.3 per cent and ended the week about 0.5 per cent higher, with healthcare stocks firming the most on the week.

Topping the index was Banco BPM’s10.2 per cent surge, after French bank Credit Agricole said it has bought a 9.2 per cent stake in Italy’s third-largest bank.

“European markets are mostly playing catch up with the US from yesterday’s close,” said Julien Lafargue, chief market strategist at Barclays Private Bank, adding that investors are waiting to get a sense of what earnings could look like with big US banks set to kick off next week.

“Traders have shrugged off the negative headlines about additional sanctions on Russia, as well as the chatter about higher interest rates from the Fed,” said David Madden, market analyst at Equiti Capital.

“But by and large, it was a negative week for equities as countries revealed plans to target Russia’s energy exports.”

The European Union formally adopted its fifth package of sanctions against Russia yesterday, including bans on the import of coal, wood, chemicals and other products.

Despite a 12 per cent recovery from one-year lows hit in March, the STOXX 600 index is still down more than 6 per cent this year on worries that surging inflation due to the Ukraine war will trigger central bank moves that could squeeze growth.

In Sunday’s first round of election in France, centre-left Macron is seen winning, but rival Marine Le Pen has surged in polls in recent weeks, leaving her victory within the margins of error. The two leading candidates from the vote will head to a run-off on April 24.

Barclay’s Lafargue said despite the polls, the turnout or lack thereof could swing the election.

France’s CAC 40 index rose 1.3 per cent, but is down about 2 per cent this week — the most among European peers — on election uncertainty.

Among other stocks, Atlantia’s rallied 8.7 per cent after a report that top shareholder Edizione and Blackstone could launch a bid for the Italian infrastructure group at €24 per share around Easter.

Telecom Italia slipped 0.9 per cent after it rejected a €10.8 billion (US$11.8 billion) offer from KKR. — Reuters