European shares rise, led by banks on health check relief

lunes 27 de octubre de 2014 04:47 GYT
 

* FTSEurofirst 300 up 0.7 pct, Euro STOXX banking index up
1.1 pct
    * Millennium bcp up 7 pct, says no need for fresh capital
    * Monte Paschi, Carige plunge after failing ECB finance test

    By Francesco Canepa and Sudip Kar-Gupta
    LONDON, Oct 27 (Reuters) - Euro zone banks led European
shares higher on Monday after the results of sector-wide
financial health checks painted a brighter picture than many
investors had expected.
    The Euro STOXX banking index rose 1.1 percent after
Sunday's European Central Bank review concluded that capital
holes identified at the end of last year had since then chiefly
been plugged, leaving only a relatively 10 billion euros to be
raised.  
    "One good sign was that a big part of the required capital
was already raised," said Francois Savary, chief investment
officer at Swiss bank Reyl. "All in all, a positive
development."
    Portugal's largest listed bank, Millennium bcp,
which failed the test, surged as much as 7 percent in early
deals after saying it has already taken measures in 2014 and did
not need to raise capital or sell assets. 
    The pan-European FTSEurofirst 300 index was up 0.7
percent at 1,321.20 points at 0823 GMT.
    Weighing on the index, Britain's Lloyds Banking Group
 also fell, dipping 2 percent after narrowly passing a
parallel test by pan-European regulators, calling into question
its chances of re-starting dividends.     
    In Italy, banks Monte dei Paschi di Siena and
Carige fell 15 percent and 17 percent respectively
after reporting capital shortfalls. 
    The country's banking sector was the
hardest hit by the ECB test, reporting a total capital shortfall
of 2.9 billion euros.
    "On the negative side from Italy's standpoint is the high
proportion of its banks that are short of capital as a function
of the overall picture," said Emanuel Arbib, head of
London-based Integrated Asset Management.
    "However, Italian banks never really got state aid and that
MPS and Carige needed fresh equity was pretty well known."
    The stress test were expected to restore confidence in the
banking sector and give healthy banks more room for lending, but
investors remain concerned about the euro zone's stagnant credit
market and low inflation rate.
    "Overall the market must now move on to the bigger problems
of credit demand and the lingering prospect of deflation - which
will take more determined efforts from governments to fix,"
analysts at Societe Generale wrote in a note.
    The ECB publishes lending and money supply data at 0900 GMT.
        
    Europe bourses in 2014: link.reuters.com/pap87v
    Asset performance in 2014: link.reuters.com/gap87v
    Today's European research round-up 

 (Reporting By Francesco Canepa, editing by John Stonestreet)