European shares rallied on Monday, led by heavyweight banking stocks, as weekend opinion polls boosted expectations that Britain would vote to stay in the European Union.
The pan-European STOXX 600 and FTSEurofirst 300 indexes both rose 2.8 percent, and the euro zone’s blue-chip Euro STOXX 50 index rose 2.7 percent to 2,928 points. All three are down about 10 percent this year.
The STOXX 600 was poised for its biggest one-day percentage gain since mid-February, and the index moved back towards a level last seen earlier in June.
Britain is due to vote on its European Union membership on June 23. Opinion polls have been split, although bookmakers have given a greater probability towards Britain opting to stay in the EU, rather than leave in a “Brexit” scenario.
Three opinion polls on Saturday showed the “Remain” camp recovering some momentum, although the overall picture remained one of an evenly split electorate.
“If the UK votes to remain in the EU, there will clearly be a short term market rebound, especially given the weakness seen over the past two weeks,” JP Morgan equity strategist Mislav Matejka said.
“This would potentially take the market back to the levels from beginning of June, when the Euro STOXX 50 was around 3,050 points,” he said.
Royal Bank of Scotland and Lloyds rose by 7 percent and 5.1 percent respectively.
The banking sector is highly geared into overall market moves and domestically focused banks, such as RBS and Lloyds, were among the hardest hit stocks last week when “Brexit” looked more likely.
Italian bank UniCredit also rose 6.3 percent after a media report that it would name former industry minister Corrado Passera as its new chief executive.
In spite of Monday’s rebound, several traders remained cautious, given the uncertainty around the referendum.
“I would not buy into this move up, and I would still look to take some risk off the table,” said Rupert Baker, a European equity sales executive at Mirabaud Securities.