Banks stocks gain on Basel III report

Paris CAC:3,951 (+33.76) Frankfurt DAX:7,163 (+49.38) Eurostoxx 50:2,819 (+19.58)

EUROPEAN SHARES rose yesterday, led by banks on a report that Basel III capital requirements would not be as stringent as previously expected.

But strategists said shares were set to remain in a tight range until there was more clarity on the euro zone debt crisis.

The pan-European FTSEurofirst 300 index of top shares rose 0.7 per cent to close at 1,134.43 points.

The index went just above its 50-day moving average, a move technical analysts see as positive. Volumes were more than 104 per cent of the 90-day average, despite the forthcoming extended weekend in the UK and United States. Over the week, the index fell 0.15 per cent.

Banking stocks were among the biggest gainers after the Financial Times reported capital requirements for European banks under the Basel III regulations would not be as tough as feared, and banks would be allowed to count more capital in their insurance subsidiaries than originally thought.

Heavyweight gainers included BNP Paribas, Société Générale and UniCredit, up between 1.5 and 2.3 per cent.

“From one day to the next, we go from risk-on to risk-off. It’s a seesaw market,” said Giuseppe-Guido Amato, strategist at Lang Schwarz in Germany.

French bank Crédit Agricole gained 3.4 per cent, with Kepler Capital Markets analysts saying it could reduce its capital needs by €4 billion.

Bailed out Franco-Belgian financial group Dexia rose 4.8 per cent after saying it would speed up its sale of assets and take a €3.6 billion hit in the second quarter in a move geared to appeasing EU regulators.

In Britain, RBS and Lloyds rose 3.4 and 2.8 per cent, helped further by SocGen initiating coverage with “buy” ratings.

Across Europe, Britain’s FTSE 100 rose 1 per cent; Germany’s DAX and France’s CAC 40 rose 0.7 and 0.9 per cent.

The Thomson Reuters Peripheral Eurozone Countries Index rose 1.6 per cent.

Miners were also among the biggest gainers, with the Stoxx Europe 600 Basic Resources Index up 1.5 per cent.

Antofagasta and Vedanta Resources rose 4.3 and 3.7 per cent. – (Reuters)