European shares steady after Monday's slump, sentiment fragile
* FTSEurofirst 300 steadies after Monday's slump
* Banking sector up but remains fragile
* Market helped by stronger energy stocks
By Atul Prakash
LONDON, Feb 9 (Reuters) - European equities steadied on Tuesday, underpinned by some positive earnings reports and stronger energy stocks, after suffering heavy losses in the previous session on persistent concerns over the health of the region's top banks.
The pan-European FTSEurofirst 300, which slumped 3.4 percent on Monday, was up 0.3 percent by 0931 GMT after falling earlier in the day. The European banking index also gained 0.4 percent after sinking 5.6 percent a day earlier.
Although the market was helped by a rise in energy stocks on stronger oil and gains in firms like Vestas that rose 7 percent after beating earnings forecasts, sentiment remained fragile. The FTSEurofirst 300 index moved in and out of negative territory several times in the first hour of trading.
Analysts said that the banking sector was prone to further weakness in the near term. The cost of insuring bank debt against default climbed on Monday to its highest since late 2013. Borrowing costs in Spain, Portugal and Italy jumped as investors demanded a fatter risk premium over safer German paper, where two-year yields hit record lows.
"The CDS (credit default swap) market is indicating a future financial stress for bond holders in the banking sector. There are concerns that the banking sector is under-capitalised in Europe and credit conditions are sub-optimal," Lorne Baring, managing director of B Capital Wealth Management, said. Continuación...