Bank shares lift stock markets in Europe

Published:  20 Jan at 10 AM

Bank shares have managed to lift European stock markets in the midst of hopeful economic signals, as reported by BBC News.

Results from US banks, as well as a report suggesting that the ECB is providing further loans to banks than originally thought, are meant to be two of the main factors. Successful bond auctions from the French and Spanish coupled with falling US unemployment helped improve sentiment too.

The Bank of America's results were better than was expected, as were Morgan Stanley's. Shares in Commerzbank rose 15 per cent after it was revealed that it will be able to increase capital without any help from the government.

In Frankfurt, Deutsche Bank increased eight per cent. In London, shares in Barclays shares rose 10 per cent while both Lloyds and RBS reported that their shares were both up nine per cent. In Paris, Societe Generale increased 13 per cent, Credit Agricole rose nine per cent, and BNP Paribas gained 8 per cent.

The soaring bank shares aided Europe's benchmark indexes with making strong closes, as the FTSE 100 ended up 0.7 per cent at 5,741 points, which was its highest closing level recorded since the beginning of August. Paris' Cac 40 closed up 2 per cent while Dax in Frankfurt gained just one per cent.

Some of the banking shares gains were sparked by the report from Morgan Stanley stating that the European Central Bank is to flood the eurozone banking system through supplying more cut-rate loans than was previously thought.