By Sruthi Shankar
(Reuters) - European stocks rallied on Wednesday as a billion-dollar takeover offer for Swiss firm Sunrise Communications boosted the telecom sector and investors looked past a collapse in Britain's quarterly economic output to bet on a stimulus-driven recovery.
The pan-European STOXX 600 <.STOXX> closed 1.1% higher, marking its fourth consecutive day of gains and settled near a three-week high. Wall Street's benchmark S&P 500 <.SPX> headed for a record high boosted by technology stocks. [.N]
Sunrise Communications
Shares in German telecoms investor Freenet
"Consolidation between operators would be positive for the industry as it would reduce competitive pressure on prices and improve the return on capital," Domenico Ghilotti, an analyst at Equita wrote in a note.
Meanwhile, London's FTSE 100 <.FTSE> jumped 2% as investors focused on signs of a recovery in economic output in June, shrugging off a record 20.4% plunge in the second quarter, the largest contraction reported by any major economy.
June output grew by 8.7% from May, just above economists' average expectation in a Reuters poll for an 8% rise.
"It's been widely expected that the UK will be in a recession. But the fact that May number was upgraded and the June number was better than expectations, is offering a little bit of encouragement," said Russ Mould, investment director at AJ Bell.
"Markets are more interested in debating the pace of the recovery."
Stock markets globally have rallied this week on improving data from China and Europe, signs of progress in developing a COVID-19 vaccine and expectations of fresh U.S. stimulus.
But U.S. House Speaker Nancy Pelosi said Democrats and the Trump administration remained far apart regarding any agreement over further economic aid.
Among other individual movers, Dutch bank ABN Amro
European food-ordering firm Just Eat Takeaway.com NV
British online fashion retailer ASOS
(Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur and Barbara Lewis)