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* Moderna COVID-19 vaccine gets green light in Europe
* Banks clock best day in two months
* Democrats win one U.S. Senate race in Georgia, lead in another
* Euro zone contraction in December deeper than estimates (Updates prices throughout, adds comments)
Jan 6 (Reuters) - European stocks jumped on Wednesday after a second COVID-19 vaccine won regulatory approval in the region, while bets rose for bigger U.S. fiscal stimulus as Democrats closed in on a Senate victory.
The pan-European STOXX 600 index rose 1.4% to its highest level since late February 2020, while the UK’s FTSE 100 rose 3.5% and Germany’s DAX gained 1.8%.
Moderna Inc’s vaccine, which won approval from the European Medicines Authority (EMA) and later the European Commission, is seen as a big boost for European hopes of containing the coronavirus.
“Eurozone stocks were already in recovery mode this morning and then the European Medicines Agency approved Moderna’s coronavirus vaccine for EU use so that added to the optimistic sentiment,” said David Madden, market analyst at CMC Markets in London.
Economically-sensitive banks surged 5.5%, logging their best day in two months, with the UK’s HSBC, Spain’s Santander and France’s BNP Paribas providing the biggest boosts.
Oil majors BP, Royal Dutch Shell and Total rose almost 6.5% as crude prices hit their highest since February 2020 following Saudi Arabia’s pledge to cut output in a meeting with allied producers.
Democrats won one U.S. Senate race in Georgia and led in another, moving closer to a surprise sweep in a former Republican stronghold that could usher in larger fiscal stimulus and pave the way for President-elect Joe Biden to push through greater corporate regulation and higher taxes.
Construction & material stocks such as CRH and HeidelbergCement also outperformed on hopes of more infrastructure spending under a Democrat-controlled Senate.
Germany is extending its lockdown until the end of the month, while a third national lockdown should not be ruled out in France, a senior medical expert said.
Meanwhile, IHS Markit’s survey showed economic activity in the euro zone contracted more sharply than thought at the end of 2020 and could get worse as renewed lockdowns hit the bloc’s dominant service industry.
In company news, French artificial heart maker Carmat gained 9.5% after it said it was preparing to start selling its products in the second quarter of this year.
British baker and fast-food retailer Greggs jumped 7.9% as it slowed a sales decline caused by the coronavirus crisis in the fourth quarter. (Reporting by Amal S and Sruthi Shankar in Bengaluru, Editing by Kirsten Donovan)