Euro Stocks End Sharply Higher, Banks Rally
Europe’s major indexes closed firmly higher Tuesday, with banking stocks leading the gainers after JPMorgan's increased takeover bid for Bear Stearns boosted investors’ hopes of a turn around in financial stocks.
The FTSEurofirst 300 index of top European shares closed unofficially 3.1 percent higher at 1,264.94 points. The rally, after a four-day Easter break, echoed Monday's gains on Wall Street after U.S. investment bank JPMorgan boosted its offer for rival Bear Stearns to $10 a share from $2.
"We are catching up with yesterday's gains in the United States, that's why Europe is strong today," a trader said.
"(European) banks are up because of the Bear Stearns deal."
HBOS rose 14.9 percent, Royal Bank of Scotland was up 9.3 percent and UBS put on 8.2 percent.
"The upswing for the banks does not necessarily signal a return of confidence, but the increased offer (for Bear Stearns) has reduced the perceived risk of collapse in the financial sector," the trader said.
Technology was the best performing sector in Europe, up 6.9 percent, with Nokia advancing 7 percent.
Energy shares also rose, as oil prices hovered around $100 a barrel. BP jumped 3.8 percent, Royal Dutch Shell rose 2.9 percent and Total gained 2.3 percent.
Miners also surged along with base metal prices. Rio Tinto gained 3.9 percent, BHP Billiton added 5.1 percent and Xstrata rose 6.7 percent.
Financial stocks have been the worst hit in a forgettable quarter for European shares in general.
Despite Tuesday's sharp rally, the FTSEurofirst 300 is down about 16 percent in 2008, hit over the past few months by worries over a global credit crisis and the prospect of a U.S. recession.
It is on track for its worst quarter since the third quarter of 2002 and its third successive quarter of losses.
Financial stocks listed on the DJ Stoxx European Banking index have lost nearly 18 percent this quarter after a similar fall during the whole of last year, driven by massive writedowns at top banks.
Worries over financials have spread to the wider economy, and investors anxiously await any signs of a recovery.
- Reuters contributed to this report.