EUROPE MARKETS: European Stocks Rally As Euro Falls, Bank Shares Gain
May 24 2016 - 11:18AM
Dow Jones News
By Carla Mozee, MarketWatch
Eurogroup to discuss Greek bailout payment
European stocks rallied on Tuesday, staging a turnaround as
financial shares advanced sharply and the euro lost ground against
the U.S. dollar.
The Stoxx Europe 600 gained 2.2% to close at 344.12, with all
sectors gaining ground after sloughing off opening losses. The
pan-European benchmark on Monday closed 0.4% lower
(http://www.marketwatch.com/story/european-shares-fall-as-bayer-fiat-come-under-pressure-2016-05-23).
Regional equities strengthened as the euro traded below $1.12,
buying $1.1147 compared with $1.1228 late Monday in New York. The
dollar headed higher Monday after some Federal Reserve officials
suggested the central bank could resume raising rates as soon as
its June meeting.
A pullback in the euro can be beneficial for European exporters,
as their products become less expensive and presumably attractive
to holders of other currencies.
Stocks in the export-heavy German market headed higher, pushing
the DAX 30 up 2.2% to 10,057.31. Auto maker BMW AG (BMW.XE) picked
up 1.9%, Volkswagen AG (VOW.XE) rose 4% and Heidelberg Cement AG
(HEI.XE) tacked on 2.6%.
German stocks remained higher even after a key reading of German
economic sentiment unexpectedly fell in May
(http://www.marketwatch.com/story/german-economic-sentiment-unexpectedly-drops-in-may-2016-05-24).
The ZEW Institute's economic-sentiment indicator came in a 6.4
compared with a FactSet estimate of 12. Respondents pointed to
uncertainties around the June 23 in/out "Brexit" referendum in the
U.K. Britain is deciding if it should stay in the European Union
and that's weighing on business sentiment in the region.
"Overall, today's ZEW reading is consistent with our baseline
scenario that the German economy should continue to grow at a
healthy pace of 0.5% [quarter-over-quarter] in Q2 mainly driven by
domestic consumption and investment, but decelerating slightly from
the strong Q1 reading of 0.7% [quarter-over-quarter]," said
economists at Barclays in a note.
The pound jumped 1% to above $1.4600 after a new poll showed
waning support for the U.K. leaving the EU
(http://www.marketwatch.com/story/pound-rises-as-poll-shows-brexit-support-waning-2016-05-24).
Banks: Augustin Eden, market analyst at Accendo Markets, said
European stocks appeared to have been injected early Tuesday with
"a little bit of confidence" from an appearance by UBS AG Chairman
Axel Weber on CNBC
(http://www.cnbc.com/2016/05/24/european-banking-sector-still-in-very-difficult-place-ubs-axel-weber.html).
Weber said he's hopeful for a pickup in trading activity in the
second half of the year, after the U.K. holds its June 23
referendum.
Weber also spoke about the difficult conditions for the European
banking sector as of late.
Among bank shares, Banca Monte dei Paschi di Siena SpA (BMPS.MI)
jumped 11%, Société Générale SA (GLE.FR) gained 5.4%, Barclays PLC
(BCS) (BCS) added 3.2% and Commerzbank AG (CBK.XE) climbed
2.7%.
Deutsche Bank AG (DBK.XE) (DBK.XE) gained 2.6%, brushing past a
ratings downgrade by Moody's late Monday.
Greek bailout meeting: Eurozone finance ministers are meeting in
Brussels today to try to hammer out an agreement on whether Greece
should pass its first review of the third bailout program agreed
last year. The Eurogroup discussion will likely focus first on
whether the austerity reforms passed by Greek lawmakers at the
weekend are enough to unlock 11 billion euros of bailout loans, and
then on the potential for debt relief.
Greece's Athex Composite dropped 1.1% to 642.08 as eurozone
finance ministers headed into the talks.
Indexes: France's CAC 40 moved up 2.5% to 4,431.52. Italy's FTSE
MIB was up 3.3% at 17,903.97 and Spain's IBEX 35 rose 2.3% to
8,918.10.
The U.K's FTSE 100 picked up 1.4% at 6,219.26.
(END) Dow Jones Newswires
May 24, 2016 12:03 ET (16:03 GMT)
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