Euro Markets Rally, UBS Buoys Bank Stocks
European markets rallied to their highest close in a month Tuesday, as banking stocks surged after UBS reported a major writedown, giving investors hope the crisis in banks was nearing an end. Traders who bet on even worse news from the bank struggled to cover their positions early on in the trading session, which helped to set the trend for the rest of the day.
The banking sector closed 5 percent higher in Europe after the Swiss banking giant UBSunveiled a first-quarter writedown of $19 billion.
It also said it was seeking a rights issue of 15 billion Swiss francs ($15.03 billion) and that the chairman is stepping down as the company predicts a first-quarter loss of $12 billion. Shares ended higher by 12.3 percent as the news was better than traders anticipated.
"It's a kitchen sink job. They've separated all their toxic waste. If they're going to finance that then everyone is saying this is the beginning of the end, this is the last capital increase," a trader told Reuters.
Germany's Deutsche Bank also said it anticipates first-quarter writedowns in the region of $4 billion. Shares were up 3.9 percent on the day.
And Deutsche Postbankjoined the growing line of banks reporting writedowns in the first quarter due to the credit crisis. Shares gained 0.7 percent, underperforming the broader banking sector.
On the other side, in the U.S. Lehman Brothers announced in after hours trading it plans to raise $3 billion in fresh capital in an attempt to end questions about the bank's balance sheet.
In other corporate news, French regulator AMF said it found evidence of insider trading and the publication of misleading information to markets at Airbus parent EADS and that it would inform Paris prosecutors, according to Reuters.
The euro lost ground across the board after German retail sales for February came in much weaker than expected, falling by 1.6 percent month-on-month, the largest fall in 9 months.
-- Reuters contributed to this report