European Stocks Surge as Banks Lead Gains

June 26, 2017
European Stocks Surge as Banks Lead Gains

European Stocks Surge as Banks Lead Gains

By Investors Hub

European Stocks surged higher on Monday, with banks leading gains, after Italy moved to shore up confidence in its fragile banking system.

The Italian government agreed to bail out two banks in the Venice region at a cost of 5.2bn euros after the European Central Bank ruled that those banks were “failing or about to fail”.

Investor sentiment also remained supported by higher oil prices, upbeat German business sentiment data and news that Swiss consumer group Nestle has become the latest target of U.S. activist investor Daniel Loeb.

A closely-watched survey showed German business sentiment unexpectedly surged to a record high in June, suggesting that the pace of economic growth in Europe’s largest economy will accelerate sharply in the months ahead.

The pan-European Stoxx 600 index was up 3 points or 0.77 percent at 390.60 in late opening deals after declining 0.2 percent on Friday.

The German DAX was rising 0.8 percent, France’s CAC 40 index was rallying 1 percent and the U.K.’s FTSE 100 was moving up 0.7 percent.

Intesa, Italy’s largest retail bank, jumped 4 percent and rival UniCredit rose 3 percent after the Italian bank bailout.

Spanish banks BBVA and Banco Santander were up 1-2 percent, while Commerzbank rallied 2.5 percent and Barclays advanced 1.5 percent. French banks BNP Paribas, Credit Agricole and Societe Generale all rose over 1 percent each.

Nestle shares soared 4 percent after activist investor Daniel Loeb’s Third Point LLC hedge fund took a $3.5 billion stake in the world’s largest food and drinks company. Sector peers such as Unilever and Danone gained 1-2 percent.

Oil & gas exploration company Tullow Oil climbed 3 percent, Total SA rose 0.4 percent and Repsol added half a percent as crude oil prices edged higher after hitting a ten-month low late last week.

German insurer Allianz rose over 1 percent after selling its 90 percent stake in regional bank Oldenburgische Landesbank to U.S. private equity firm Apollo.

Automaker Volkswagen gained 1.3 percent after its Slovak unit reached an agreement with a trade union on salary rise.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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