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European Stocks Close Higher as Bank Shares Rise

European stock markets closed mostly in the green Wednesday after struggling to find direction during the day, with positive news from Deutsche Bank offset by uncertainty about the overall strength of the global economy.

In the U.S., stocks traded lower amid weakness in the technology sector, as bearish sentiment on chip bellwether Intel weighed on the major indexes.

London's FTSE-100 was the best performer among the European indexes. The Paris CAC was slightly higher, the Frankfurt DAX was flat while the FTSE CNBC Global 300 was lower.

Banks were among the best-performing sectors along with the construction sector, travel and leisure and autos.

Deutsche Bank reassured investors its third-quarter profit would rise more than $2 billion, despite over $3 billion in write-downs due to the recent credit-market crunch. Shares of Deutsche Bank closed 2.2% up.

Also in the banking sector, shares of Northern Rock closed nearly 10% up on hopes the U.K. mortgage lender could be rescued from collapse. Private equity group JC Flowers raised $30 billion, the Financial Times reported without citing sources Tuesday, leading investors to believe it would bid for the company.

Northern Bargain

Taking over Northern Rock could be a bargain for private equity groups due to its large mortgage base, Steven Mayne, from from Montague Pitman Stockbrokers, told "European Closing Bell."

But, he added, banks were not likely to submit bids for the beleaguered mortgage lender, which last month saw depositors queuing outside its branches to take out their money after it asked for emergency lending from the Bank of England.

"Northern Rock has probably got such a bad public profile right now that it's probably best left alone," from the point of view of British banks, Mayne said.

Meanwhile, French market watchdog AMF confirmed shortly after the start of trading that it sent a report alleging insider trading at Airbus maker EADS to prosecutors. Shares of EADS closed 0.6% lower, while shares of the aerospace company's biggest shareholder, Lagardere, tumbled 5.7%.

One solid performer in the CAC was catering company Sodexho Alliance, which posted a 4.6% rise in its full-year sales and raised its expectations for operating profit. Shares jumped nearly 4%.

On Thursday, Europe's two main central banks, the European Central Bank and the Bank of England, hold their rate-setting meetings.

Economists are largely expecting them to hold rates steady because of uncertainty caused by the turmoil in the financial markets.

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