European shares hit record high as Novo Nordisk drives healthcare boost

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By Ragini Mathur

Dec 23 (Reuters) - European shares briefly hit a record high on Tuesday, powered by gains in the healthcare sector, after heavyweight Novo Nordisk clinched U.S. approval of its weight-loss pill, although declines in banks capped the advance.

The pan-European STOXX 600 .STOXX was up 0.2% at 587.93 by 0947 GMT. Major regional markets were largely mixed, with the benchmark index in Germany .GDAXI up 0.1% and the one in Spain .IBEX down 0.2%.

Shares of Novo Nordisk NOVOb.CO advanced 7.6% after the U.S. Food and Drug Administration approved its weight-loss pill on Monday, giving the Danish drugmaker an edge in the race to market oral weight-management medications and regaining momentum against U.S. rival Eli Lilly.

The Wegovy manufacturer, once an investor darling, saw billions erased from its market value earlier this year as concerns mounted about losing ground in the obesity drug market it pioneered.

The healthcare sector .SXDP jumped 1.1%, outperforming peers.

"The competition driving both these companies to deliver for the consumer is fantastic and it will be a lift for Novo Nordisk, because it really has struggled over the past year... it needed to deliver for investors," said Danni Hewson, head of financial analysis at AJ Bell.

A gauge for euro zone equity volatility .V2TX fell 0.19 point to 14.23, its lowest in just over a year.

On the flip side, banks .SX7P, the best performers this year with an over 70% surge, lost 0.3% on the day, weighing the most on the benchmark index.

Looser regulations, a favourable economic environment and increased merger and acquisition activity this year sent the index tracking banks to its highest level since 2008.

Consumer discretionary shares fell with some luxury stocks such as Richemont CFR.S and Hermes HRMS.PA sliding marginally.

On Monday, China said it will impose provisional duties of up to 42.7% on dairy imports from the European Union, seen as retaliation for the bloc's tariffs on electric vehicles.

"Market consensus points to further rotation into cyclical names — an area where Europe could continue to benefit... however, renewed trade tensions with China could derail what little optimism remains around European growth," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Investors will also watch third-quarter U.S. GDP figures, which are expected to show that the U.S. economy continued to grow strongly, in an otherwise data-light week.

Among other movers, flatexDEGIRO FTKn.DE shares were down 1.7% after Germany's market watchdog BaFin fined the broker for breaching securities-trading rules.

(Reporting by Ragini Mathur and Purvi Agarwal in Bengaluru; Editing by Vijay Kishore)

((Ragini.Mathur@thomsonreuters.com;))