LONDON: European stock markets rebounded Tuesday, led sharply higher by banking shares boosted by an apparent ebbing in the chances of a leave vote in Britain's upcoming referendum on EU membership.
London's benchmark FTSE 100 index climbed 1.4 percent compared with Monday's close, while the pound picked up a couple of cents against both the dollar and euro.
Frankfurt's DAX 30 index rose 2.2 percent and the Paris CAC 40 jumped 2.5 percent.
"European markets firmed on Tuesday boosted by a rise in financial shares, a drop in the euro and oil prices rising for the first time in three days," said Jasper Lawler, market analyst at traders CMC Markets.
"Investors in the banking sector have seemingly taken heart from the suggestion from UBS Chairman Axel Weber that trading activity will pick up after the Brexit vote. Flows out of the much-hated financial sector have abated since the Fed realigned expectations of a US rate hike this summer," he added.
Shares in Barclays climbed 3.2 percent and RBS jumped 4.8 percent in London, while in Paris shares in BNP Paribas rose 3.7 percent and Societe Genarale shot up 5.4 percent. In Frankfurt Deutsche Bank shares gained 2.6 percent and Commerzbank added 2.7 percent.
Meanwhile, Yoav Nizzard at FXCM currency traders said that "European markets are sustained by a return in risk appetite by the intervention of Mark Carney, the governor of the Bank of England, who is determined to fight against a clearly harmful Brexit for the British economy which would also provoke a period of uncertainty in the eurozone."
Carney has been outlining the risks of Brexit to lawmakers.
"Sterling saw a big move higher during the appearance of Bank of England governor Mark Carney at Brexit-focused inflation hearings, whilst another poll showed rising public support for Britain remaining in the EU," said Lawler.
The pound rose to $1.4629 from a close of $1.4484 on Monday. Against the euro, it climbed to 1.3120 from 1.2909.
Investors brushed off a survey showing that investor confidence in Germany fell unexpectedly in May as uncertainty over a possible exit by Britain from the European Union overshadows better-than-expected economic data.
The investor confidence index calculated by the ZEW economic institute decreased by 4.8 points to 6.4 points in May, the think tank said in a statement.
"The strong growth of the German economy in the first quarter of 2016 appears to have surprised the financial market experts. However, they seem not to expect the economic situation to improve at the same pace going forward," said ZEW president Achim Wambach.
"Uncertainties regarding developments such as a possible 'Brexit' currently inhibit a more optimistic outlook," he said.
Britain goes to the polls on June 23 to decide whether to remain in the European Union.
US stocks also pushed higher, with the Dow climbing 1.2 percent in late morning trading as sales of new homes in the United States surged in April to their best level since January 2008.
Asian stock markets meanwhile slipped Tuesday as falling oil prices deflated energy shares,.
Investors were eyeing also the start on Thursday of a Group of Seven summit in Japan, where US President Barack Obama and other leaders from the club of rich nations will meet for annual talks largely focused on the sluggish global economy.
- Key figures around 1530 GMT -
===============================
London - FTSE 100: UP 1.4 percent at 6,219.26 points (close)
Frankfurt - DAX 30: UP 2.2 percent at 10,057.31 (close)
Paris - CAC 40: UP 2.5 percent at 4,431.52 (close)
EURO STOXX 50: UP 2.8 percent at 3,013.84
New York - Dow: UP 1.2 percent at 17,697.45
New York - S&P 500: UP 1.2 percent at 2,072.69
New York - Nasdaq: UP 1.7 percent at 4,847.94
Tokyo: Nikkei 225: DOWN 0.9 percent at 16,498.76 (close)
Shanghai - Composite: DOWN 0.8 percent at 2,821.67 (close)
Hong Kong - Hang Seng: UP 0.11 percent at 19,830.43 (close)
Euro/dollar: DOWN at $1.1147 from $1.1219 on Monday
Dollar/yen: UP at 109.96 yen from 109.25 yen
Comments
Comments are closed for this article.