European stocks shrug off Wall Street's slide, led higher by banks
* FTSEurofirst 300 up 0.3 pct, Euro STOXX 50 up 0.6 pct
* Strong demand seen for bank option calls
By Blaise Robinson
PARIS, Sept 26 (Reuters) - European stocks rose on Friday, shrugging off declines on Wall Street, with euro zone banks leading the gains on expectations they will be the big winners in the European Central Bank's drive to stave off deflation.
Spain's Banco Santander rose 0.8 percent, Italy's Intesa SanPaolo gained 1.6 percent and BNP Paribas added 1 percent. The STOXX euro zone banking index gained 0.6 percent, the top sector across Europe.
Investors increasingly expect euro zone banking stocks to rally in coming months as the ECB steps up efforts to support the region's economy. The central bank announced more stimulus measures earlier this month, including purchases of asset-backed debt, in addition cheap loans to banks announced earlier.
Societe Generale equity analysts recommend buying European banks set to benefit from the ECB's latest measures. They also say the ECB's asset-quality review - whose results are due next month - should give banks more visibility.
"It's a theme that many clients want to play, but not necessarily directly with long positions on the cash market. There's been a big rise in the open interest in calls on banking stocks in the past few months," said Vincent Cassot, head of equity derivatives strategy at Societe Generale.
Demand was lower than expected last week for the ECB's four-year loans to banks. But several investors say banks will wait for the asset-quality review to end before taking part in the ECB scheme. Another round of loans is due in early December. Continuación...