LONDON: European stock markets rebounded slightly Monday after US lender First Citizens bought most of collapsed rival Silicon Valley Bank, easing fears of a sector crisis.
Frankfurt rallied 1.3 percent, with shares in troubled Deutsche Bank surging more than five percent after diving Friday on investor fears over its financial health.
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London and Paris stocks also jumped, with British lender Barclays and French peer BNP Paribas each gaining about two percent.
Oil rose modestly after slumping on demand fears before the weekend, while the dollar largely steadied.
‘Relative calm’
The US Federal Deposit Insurance Corporation (FDIC) announced that First Citizens agreed to buy the deposits and loans of SVB, whose collapse this month had sparked fears of a global contagion.
Analysts remained cautious over the outlook.
“European stock markets bounced… as relative calm returned amid the choppy seas of the banking ‘crisis’ as a buyer was found for Silicon Valley Bank’s assets,” said analyst Neil Wilson at trading firm Finalto.
The news helped “lift sentiment across the banking sector after a rocky end to last week, though the pall of banking stress still hangs over the market”.
The IMF also injected a note of caution.
International Monetary Fund chief Kristalina Georgieva on Sunday warned that risks to financial stability had increased – and stressed “the need for vigilance” following the turmoil.
Concerns over Deutsche Bank had rocked markets late week, particularly after Switzerland’s enforced UBS takeover of troubled rival Credit Suisse.
The turmoil prompted US President Joe Biden, German Chancellor Olaf Scholz and other European officials to try and calm investors about the sector.
In Asia on Monday, Hong Kong and Shanghai stocks fell, while Tokyo, Sydney and Singapore rose following a positive finish on Wall Street last week.
‘No bank is immune’
Clifford Bennett, chief economist at ACY Securities, said it was unlikely the German government would allow Deutsche Bank to collapse or face restructuring.
But it showed “the continuing and growing pressure on the banking system among the major Western economies”, he wrote in a note.
“No bank is immune in the current climate. The forces that lead to the crisis so far seen, of higher rates and depositor uncertainty, only continue to grow.”
Deutsche Bank returned to financial health last year following a major restructuring after years of problems.
Yet its share price has shed more than 15 percent in value so far this year.
Markets were partly soothed last week after financial authorities acted to prevent contagion from the collapse of US regional lenders this month.
But sentiment soured following decisions by central banks in the United States, Britain and Switzerland to hike interest rates, despite concerns about the impact on commercial lenders.
Key figures around 1120 GMT
London - FTSE 100: UP 0.8 percent at 7,462.95 points
Frankfurt - DAX: UP 1.3 percent at 15,146.43
Paris - CAC 40: UP 1.1 percent at 7,093.77
EURO STOXX 50: UP 1.0 percent at 4,172.57
Tokyo - Nikkei 225: UP 0.3 percent at 27,476.87 (close)
Hong Kong - Hang Seng Index: DOWN 1.8 percent at 19,567.69 (close)
Shanghai - Composite: DOWN 0.5 percent at 3,248.97 (close)
New York - Dow: UP 0.4 percent at 32,237.53 (close)
Euro/dollar: UP at $1.0767 from $1.0760 on Friday
Pound/dollar: UP at $1.2256 from $1.2233
Euro/pound: DOWN at 87.86 pence from 87.95 pence
Dollar/yen: UP at 131.42 yen from 130.73 yen
Brent North Sea crude: UP 0.5 percent at $75.33 per barrel
West Texas Intermediate: UP 0.5 percent at $69.58 per barrel
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