European markets close higher amid tumultuous week; Stoxx 600 up 1.8%

LONDON — European stocks closed higher on Wednesday, capping off the latest trading day in a whirlwind week impacted by fears over the new omicron Covid variant.

The pan-European Stoxx 600 closed up by 1.8% provisionally, with autos and travel and leisure stocks jumping more than 3% to lead gains as all sectors and major bourses entered positive territory.

The strong start to December comes after a choppy few days for global markets. Traders were rattled late last week and into Tuesday by concerns surrounding the new omicron Covid-19 variant, amid fears that it could evade vaccines.

Major markets across Asia-Pacific bounced back Wednesday while U.S. stocks also rebounded following a sell-off on Wall Street on Tuesday, due to both fears about the new variant and the Federal Reserve mulling a quicker-than-planned taper.

U.S. stocks hit their session lows Tuesday when Fed Chair Jerome Powell said the central bank will discuss speeding up the bond-buying taper at its December meeting.

Despite the potential disruption of omicron, the Fed chief said he thinks reducing the pace of monthly bond buys can move quicker than the $15 billion-a-month schedule announced earlier this month.

Hopes are pinned on vaccine makers' ability to develop effective shots against the strain but there are still many unknowns about the new variant. The World Health Organization has said it will take several weeks to gain a full picture of how omicron's mutations affect its response to existing vaccines.

Markets nosedived Tuesday morning following comments from Moderna CEO Stephane Bancel, who told the Financial Times that he expects vaccines to be less effective against the new strain.

Bancel also told CNBC on Monday that it could take months to develop and ship a vaccine that specifically targets the omicron variant.

On the data front, November's final manufacturing purchasing manager's index (PMI) reading for the euro zone came in at 58.4, a slight improvement on October's 58.3 but short of an initial 58.6 flash estimate.

In terms of individual share price action, Hungary's Wizz Air jumped 7% to lead the broad advance for travel stocks. Lufthansa added 5%.

At the bottom of the European blue chip index, London-based fintech firm Wise fell 8% after Credit Suisse cut its target price for the stock a day after the company's earnings report.

— CNBC's Ryan Browne and Maggie Fitzgerald contributed to this market report.