Over 100 billion euros was added to the value of Europe's banks on Monday after policy makers agreed a massive rescue package to stop the Greek debt crisis spreading.Santander and Credit Agricole led a 13 percent surge by Europe's bank index, its biggest one-day surge for 20 months.It clawed back most of last week's 14 percent slump, when the sector was battered by fears about banks' exposure to a sovereign debt crisis."The main reason for the panic last week was the government bond market was grinding to a halt in Europe."We've had a big move by European authorities ... a big liquidity injection, a big support package, Spain and Portugal are putting more measures on the table to cut their deficits, so everything you wanted to see over the weekend has happened," said Arturo de Frias, an analyst for Evolution in London.The European Union and the IMF agreed early Monday a $1 trillion package of loans and loan guarantees to any euro zone country needing funds.By 1110 GMT the STOXX Europe 600 banking index was up 13.77 percent at 211.6 points, its steepest rise since September 2008. The index hit a 10-month low of 183.6 on Friday.Spain's Santander and BBVA each rebounded 19 percent, Italy's UniCredit and Intesa SanPaolo surged over 16 percent, France's Credit Agricole and Societe Generale stormed over 19 percent higher, and Belgium's KBC Groep jumped 21 percent.Analysts said the rally was understandable given the scale of losses during the even steeper falls of the last month.Santander, for example, lost a quarter of its value in the previous month as worries deepened about Spain's debt, while Credit Agricole shed over a fifth as it and other French banks are more exposed to Greece than lenders elsewhere.All banks raced ahead. UBS jumped 10 percent, Deutsche Bank rallied 12 percent and Allied Irish Banks leapt 28 percent.Britain's HSBC rose 8 percent and Barclays jumped 14 percent.Investors remain jittery that a UK hung parliament could hinder attempts to rebuild the economy, although Britain's two biggest opposition parties appear to be making progress to form a coalition government.The cost of insuring banks against the risk of default fell sharply too. Bank credit default swaps (CDS) tightened across the board, and the iTraxx senior financial index was about 60 basis points lower at 124 basis points -- meaning it cost an average of $124,000 to insure $10 million of debt.Portuguese bank CDS were down about 175 basis points, French bank CDS tightened about 100 basis points and UK bank CDS dipped about 50 basis points, a trader said. Credit Agricole five-year CDS were at 132.5 bps, down about 100 bps."We have seen moves like this before, during 2008 when various measures were announced," the trader said.Louis Gargour, chief investment officer of hedge fund LNG Capital, said bank exposures to trouble spots seemed manageable. "They have been deleveraging, they have been cutting exposure and monitoring it very closely. We may have a couple of hiccups but not a bank failure as a result of this exposure," he said.The rescue package, hammered out by European Union finance ministers, central bankers and the International Monetary Fund (IMF) through the weekend to resolve a Greek debt crisis that has threatened to sink the euro and unravel euro-zone unity, supported the euro and analysts said was a decisive move to calm financial markets.(Additional reporting by Natalie Harrison and Jane Baird in London, Ben Berkowitz in Amsterdam and Blaise Robinson in Paris; editing by Karen Foster and David Cowell)News posted by www.newsinfoline.com
Click here to read more news from www.newsinfoline.com
Please follow our blogs
newsinfolinephotogallery
prabugallery
newsinfolinephotogallery1
photogallery1
No comments:
Post a Comment