June 17, 2016 / 8:57 AM / 2 years ago

REFILE-Banking sector rebound lifts European shares, Ericsson drops

(ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development).

(Refiles to fix spelling of Consultinvest in seventh paragraph)

* Pan-European STOXX 600 index up more than 1 percent

* Banks lead gainers as investors lured by low valuations

* Ericsson falls after reported U.S. corruption probe

By Danilo Masoni

MILAN, June 17 (Reuters) - European shares rose on Friday, helped by a rebound in the battered banking sector, with investors attributing the rebound partly to the suspension of campaigning for Britain’s EU referendum following the shooting of a lawmaker.

The killing of pro-EU Member of Parliament Jo Cox on Thursday shocked the nation, prompting both the “Leave” and “Remain” camps to halt campaigning for the June 23 vote.

“Even if the vote goes ahead as planned, which presumably it will, yesterday’s events could damage pro-Brexit campaign,” CMC analyst Jasper Lawler said in a note.

The pan-European STOXX 600 and FTSEurofirst 300 indexes both rose around 1.2 percent by 0824 GMT, although they remained on course to end the week with a loss after falling near four-month lows in the previous session.

Worries that Britain, the world’s fifth-largest economy, could quit the European Union have dominated markets this week and driven investors towards safe-haven assets such as gold and German bunds and away from stocks.

Europe’s STOXX 600 Banks index rose 3 percent as it rebounded from heavy losses seen in the previous session when British exit risks and new signs that interest rates would stay low for longer compounded the uncertainty surrounding the sector. The index has been the worst sectoral performer so far this year with a loss of around 26 percent.

“By imposing stricter capital requirements European regulators and the ECB have helped avoid Lehman-type situations and valuations are so low that sooner or later banks will be seen as strong buying opportunities,” said Enrico Vaccari, fund manager at Italy’s Consultinvest.

“As far as Brexit, I expect Britain to remain in the European Union and make up its mind like in the parable of the Prodigal son,” he added.

Shares in Bank of Ireland, Lloyds Bank, UniCredit, Deutsche Bank and Santander were among the top gainers among Europe’s top banks and on the FTSEurofirst. They were all up between 3.7 and 6 percent.

The implied probability of a Remain vote in Britain rose to 65 percent late on Thursday, according to Betfair odds.

Travel stocks were also in demand with company TUI rising 3.5 percent after its CEO told a German newspaper the company saw record bookings in 2016.

Ericsson was among the top losers on FTSEurofirst, down 1.8 percent, after a Swedish daily said the telecom gear maker is being investigated by U.S. authorities over possible corruption related to its business in China. Ericsson spokesperson declined to comment on the report.

Today’s European research round-up

ADVISORY- Reuters plans to replace intra-day European and UK stock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia format from 0600 London time through the 1630 closing bell, it will include the best of our market reporting, Stocks Buzz service, Eikon graphics, Reuters pictures, eye-catching research and market zeitgeist. Breaking news and dramatic market moves will continue to be alerted to all clients and we will continue to provide a short opening story and comprehensive closing reports.

If you have any thoughts, suggestions or feedback on this, please email mike.dolan@thomsonreuters.com.

Mike Dolan, Markets Editor EMEA.

Reporting by Danilo Masoni, Editing by Vikram Subhedar; Editing by Janet Lawrence

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