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Commodity-linked stocks lead gains
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Embracer falls to the bottom of the STOXX 600
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Real estate stocks hit 5-1/2 month lows
(comment added, prices updated)
By Sruthi Shankar
March 28 (Reuters) – European stocks rose for a second session on Tuesday, buoyed by commodity and banking stocks after a buyout deal for the failed Silicon Valley Bank raised hopes of containing the banking crisis.
The continent’s STOXX 600 index rose 0.4%, continuing its rebound from last week’s market crisis caused by the collapse of Credit Suisse and two mid-sized US lenders.
European banks rose 1.2%, contributing to Monday’s 1.4% gain. Swiss bank UBS rose 1.6% after CEO Ralph Hamers said in an internal Reuters memo that the bank sees its government-orchestrated takeover of Credit Suisse as a growth opportunity. Credit Suisse shares rose 1.7%.
“They could see some kind of recovery rally. There’s no doubt banks are cheap, but it’s not a sustainable rally yet,” said Rupert Thompson, Kingswood’s chief economist.
“Net interest margins, which have so far benefited from higher interest rates, are likely to come under pressure because you have deposit outflows. And if we get a recession, the prospects for the banks are not so good.”
Economically sensitive sectors such as oil & gas, mining and insurance were among the other top performers in Europe.
Real estate stocks fell 1.4% to a five-and-a-half-month low. Citigroup warned Monday that the potential downside for the sector could top 50% on the specter of a systemic credit event following recent bank failures.
Germany’s Aroundtown fell 10% to a record low ahead of its results on Wednesday, as several traders feared the company might scrap its dividend.
While the STOXX 600 is set to end the March quarter up nearly 5% on signs of economic resilience and hopes that major central banks are nearing the end of their monetary tightening cycles, banks were set for a modest 1.3% gain .
The story goes on
The European Banking Index was on track for its worst monthly result since March 2020 as pandemic fears swept financial markets.
Telecom Italia rose 1.6% after Bloomberg News reported that Italy’s state-backed lender was working on a higher offer for the company’s fixed line.
Embracer fell 13.8% to the bottom of the STOXX 600 after the Swedish gaming group pushed back dates for the expected closing of several deals announced last year. (Reporting by Sruthi Shankar in Bengaluru; Editing by Sonia Cheema and Subhranshu Sahu)
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