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European stocks up sharply as financials gain; DAX up 2.8%

Stock MarketsOct 05, 2011 06:37AM ET
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Investing.com – European stock markets were up sharply on Wednesday, as shares in the financial sector were boosted by reports that European Union finance officials were looking at a bank recapitalization plan.

During European morning trade, the EURO STOXX 50 jumped 2.45%, France’s CAC 40 rallied 2.7%, while Germany’s DAX 30 climbed 2.8%.

Market sentiment was lifted after a report in the Financial Times said that euro zone  finance ministers are looking into ways to coordinate the recapitalization of European lenders after agreeing that additional measures are needed support the region’s banks.

Shares in French lenders, which have high exposure to European sovereign debt rallied on the news. BNP Paribas jumped 6.5%, Credit Agricole shares rose 7.8%, while Societe Generale advanced 5.1%.

Shares in Italian lenders were broadly higher, amid speculation the European Central Bank was buying Italian government debt after ratings agency Moody’s downgraded Italy’s rating by three notches to A2 from Aa2, with a negative outlook late Tuesday. Unicredit shares rose 2.4%, while Intesa Sanpaolo added 1%.

Troubled French-Belgian lender Dexia saw shares climb 4%, having earlier gained as much as 10% after France’s finance minister said in a radio interview that a decision on the bank’s future will be made Thursday.

Dexia shares have plunged nearly 30% in the past two sessions amid reports that the bank will be broken up.

In London, the commodity-heavy FTSE 100 rose 2% as shares in raw material producers led gains after oil and metal prices advanced on the New York Mercantile Exchange.

Mining giants BHP Billiton and Rio Tinto saw shares climb 4.9% and 5% respectively, copper producer Xstrata jumped 5.6%, while oil major British Petroleum rose 3%.

Shares in supermarket operator J. Sainsbury gained 4.5% after saying that that comparable sales in its fiscal second quarter rose 5.4%, above expectations for a 1.7% gain.

Homebuilders also contributed to gains after HSBC upgraded the sector to ‘overweight’. Taylor Wimpey shares rose 6.5% and Barratt Developments added 6.9%.

Elsewhere, U.S. equity markets pointed to a mixed open ahead of earnings reports from wholesale retailer Costco, agricultural group Monsanto and hotel operator Marriot International.

The Dow Jones Industrial Average futures pointed to a loss of 0.15%, S&P 500 futures signaled a gain of 0.1%, while the Nasdaq 100 futures indicated a 0.1% drop.       

Later in the day, the U.S. was to release a report on ADP non-farm payrolls, while the ISM was to produce a report on service sector activity.


European stocks up sharply as financials gain; DAX up 2.8%
 

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