European stocks hit near three-week high as auto, travel shares surge

European shares reached a three-week high on Tuesday after automakers saw a surge in car sales in China, lifting hopes of an economic recovery from the COVID-19 pandemic.

The pan-European STOXX index gained 1.6%, with the rally being led by stocks from travel and leisure companies, miners, and energy firms.

The U.K.’s FTSE index gained 1.8% despite reporting Britain’s employment numbers falling by a record 220,000 in three months to June.

Automakers soared to 3.1% after data showed China’s car sales surging above 16.4% in July, continuing gains for its fourth consecutive month, signalling the world’s largest vehicle market steadily rebounding off of lows from the COVID-19 lockdowns.

Boosting economic data in Europe is reflective of hope from a stimulus deal and a vaccine for COVID-19, which put the STOXX 600 index on track for strong gains in August.

However, souring U.S.-China relations and uncertainty over the 2020 U.S. presidential election will continue to mount concerns for investors.