Eurostoxx 50: 2,239.30 (+48.86) Frankfurt DAX: 5,670.07 (+132.59) Paris CAC: 3,154.20 (+66.56)

EUROPEAN STOCKS rose yesterday after two days of losses dragged equities near to the cheapest valuation in more than two years and a report showed US consumer spending gained in July.

EFG Eurobank Ergasias and Alpha Bank jumped by the maximum 30 per cent after agreeing to merge to create Greece’s biggest bank, driving the ASE Index to the biggest gain in 21 years.

Munich Re and Swiss Re, the world’s largest reinsurers, advanced more than 4 per cent as the damage from Hurricane Irene in the US was less severe than estimated. Munich Re gained 4 per cent to €89.17, and Swiss Re advanced 4.4 per cent to 41.48 Swiss francs.

National benchmark indexes rose in all of the western European markets. Greece’s ASE soared 14 per cent, the most since 1990.

The merger of Eurobank and Alpha Bank is “great news”, said Jacques Porta, a fund manager at Ofi Patrimoine in Paris, who helps oversee $400 million in stocks.

“Investors are waiting for a restructuring of the financial system so it’s very positive, especially as the merger is taking place in the country that was the most affected by the crisis.”

National Bank of Greece, the country’s largest bank, surged 29 per cent to €3.59, while Piraeus Bank jumped 29 per cent to 72 cents.

Public Power Corp, Greece’s biggest electricity producer, rallied 24 per cent to €6.81.

Holcim, the world’s second biggest cement maker, rallied 4.4 per cent to 48.29 Swiss francs, and Vinci, Europe’s largest builder, rose 4.2 per cent to €35.39.

Banco Popolare added 2.4 per cent to €1.15 as Italy’s fifth biggest bank approved a plan to merge some units into the holding company as part of measures to increase efficiency and reduce costs.

Nordea rose 3.5 per cent to 57.50 kronor. The Nordic region’s biggest bank said it planned to cut a total of 2,000 workers and had started talks with unions.

Roche Holding gained 1 per cent to 137.90 Swiss francs. The company said it expected government austerity measures to boost its medical-diagnostics unit in the next three to five years thanks to the broader use of tests to see which patients should use expensive treatments. – (Bloomberg)