Banks Lead European Stock Rally

European equity markets rebounded strongly on Tuesday, with banking stocks leading the rally after JP Morgan’s move to increase its offer for Bear Stearns lifted Wall Street and Asia., Financial Times 3/25/2008 6:56:26 AM

At midday, the FTSE Eurofirst 300 was 3.1 per cent higher at 1,264.23 with the Xetra Dax 30 in Frankfurt 3.2 per cent higher at 6,525.12 and the CAC 40 in Paris 3.5 per cent stronger at 4,692.07. In London the FTSE 100 rose 3.5 per cent to 5,688.2.

The rally in Europe followed gains across Asia where banks led the advance, after the news of JP Morgan’s fivefold increase on its offer for Bear Stearns, taking the price to $10 a share and valuing its bid at $1.2bn.

Investors backed the financial sector across the continent on hopes the move marked the beginning of the end of the worst of the subprime crisis. The mood was also lifted by surprisingly strong home sales data in the US, which helped fuel Wall Street’s strong rally on Monday.

Other banks which have been providing grist for the rumour mill bounced back strongly. Switzerland’s big two financial stocks shrugged off recent fears of further big writedowns to make strong gains. UBS rose 7.6 per cent to SFr30.04, with Credit Suisse 6.6 per cent higher at SFr51.75.

Banks Lead European Stock Rally