MILAN: Shares in most of Italy's leading banks rebounded on Tuesday as investors bet a meeting between Italy and the EU would shed more light on a scheme to help lenders to offload bad loans.
Merger talks between Italian cooperative lenders were also supporting some of the stocks, analysts said. Rome and Brussels have been talking for almost a year over measures to help banks sell some of their 201 billion euro ($218 billion) non-performing loan stockpile.
These loans tie up banks capital and prevent new credit being advanced to feed a fledgling economic recovery.
"Negotiations have accelerated in the last few days and the parties are now discussing the technical details of the Italian proposal," a source close to the matter said.
Ahead of a meeting between Italy Treasury minister Pier Carlo Padoan and EU competition chief Margrethe Vestager scheduled for late Tuesday afternoon, a spokesman for the commission said the EU executive was "still in constructive contacts" with Italy.
Rome and Brussels are discussing a scheme to allow Italian banks to buy state guarantees to improve conditions under which they can sell bad loans on the market.
It will be up to the Italian treasury to grant the guarantee, the CEO of state lender CDP said in Rome on Tuesday.
"The focus is on the meeting in Brussels and investors are adjusting their positions on the banks before the event," said Vincenzo Longo, analyst at broker IG. Monte dei Paschi and Banca Carige bucked the positive trend.
At 1525 GMT shares in Banca Monte dei Paschi di Siena traded 4.5 percent lower, while Banca Carige was down 2.8 percent compared with a 2.5 percent rise in the Italian banking index.
"Monte dei Paschi and Carige are the weakest lenders so the market attitude is cautious before details from Brussels," analyst Longo said.
Another trader said there were hopes the meeting could mark a turning point in the discussions, adding that pressure on banking stocks would resume if there was no progress.
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