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* Brexit deal announcement awaited, fishing still under
discussion
* London mid-caps hit highest in 10 months
* Banks lead gains, material stocks dip
* Stock markets in Germany, Italy and Switzerland closed
* No European markets report on Dec 25 due to Christmas
holiday
(Updates to close)
By Susan Mathew and Supriya R
Dec 24 (Reuters) - European shares rose for a third straight
session on Thursday with a Brexit trade deal finally in sight
just a week before Britain cuts its ties with the European
Union.
London mid-caps jumped 1.2% to end a holiday
shortened session at their highest since February, while the
FTSE 100's gains were limited by a stronger pound
weighing on the exporter-heavy index.
Brexit-sensitive banks led the pan-European STOXX
600 index 0.2% higher to make up losses from earlier in
the week when a new fast-spreading variant of the coronavirus
spooked markets.
After months of wrangling, and amid warnings of no deal,
Britain and the European Union were on the cusp of striking a
narrow trade agreement, sources in London and Brussels said,
swerving away from an acrimonious split five years after the
Brexit referendum.
Talks could still have "some hours to run", a UK source said
on Thursday, adding that the two sides were still haggling over
the EU's right to fish in British waters.
"Everyone's very curious to see what ultimately will be
decided on," said Bert Colijn, senior economist, eurozone at
ING, adding that the big theme was if tariffs were off the table
- seen as crucial to limiting the impact on European exporters.
"If you look at it in the very long run... finding a deal at
the 11th hour is going to be positive from a growth potential
side for the UK economy, and therefore, ultimately... to
stocks."
Banks jumped 0.7% with Britain's Lloyds and
Barclays up 4.0% and 1.8%, respectively.
Irish stocks closed down 0.3% with Flutter
Entertainment falling 2.2%, making the travel and
leisure sector the biggest decliner in Europe.
France's CAC 40 closed down 0.1%, while Spain's
lender-heavy index climbed half a percent.
Stock markets in Germany, Italy and Switzerland were closed
for the Christmas holidays.
Unprecedented amounts of stimulus, and lately vaccine
optimism, have seen the STOXX 600 rise close to 50% from its
March lows, though it still remains about 9% below this year's
pre-pandemic high and is on course to end the year about 5%
lower.
Banks and oil stocks have weighed the most on
worries about the economic toll of the pandemic, while
technology stocks have led the recovery among major
sectors as they emerged winners amid the work-from-home trend.
(Reporting by Susan Mathew in Bengaluru; editing by Uttaresh.V,
Subhranshu Sahu, Kirsten Donovan)
