Stocks rise as UniCredit lifts Italy's banking sector

Eurostoxx 50: 2,714.83 (+21.30) Frankfurt DAX: 7,268.42 (+94.28) Paris CAC: 3,792.05 (+17.92)

EUROPEAN SHARES made some welcome gains yesterday on hopes global central banks would offer more policy support for beleagu- ered markets.

Although Ireland became the third euro zone country, along with Greece and Portugal, to have its sovereign debt rating downgraded to junk status, after Moody’s lowered Irish bonds to Ba1 from Baa3. Equity markets in Europe, including Dublin, mostly rallied.

Although Irish bond yields soared and credit default swaps, which track the cost of insuring debt against the risk of default, rose sharply, equity investors were more sanguine and Dublin’s Iseq climbed 0.5 per cent.

With the heat off Italy, the FTSE MIB index climbed 1.8 per cent to 18,842.65, helped by the two biggest fallers in recent sessions.

UniCredit, the bank, gained 1.5 per cent to €1.24, while rival Intesa Sanpaolo climbed 4.1 per cent to €1.64.

Federico Ghizzoni, chief executive of UniCredit said Italian banks had come under speculative attack in recent sessions resulting in losses that bore “no relation to Italy’s fundamentals or to the health of the country’s banks”.

Pressure came from chip makers after a weak performance from the sector on the US Nasdaq index overnight, and following weak guidance from European sector bellwether ASML.

The Dutch manufacturer of chipmaking machinery reported second-quarter earnings that topped expectations, but orders taken during the period failed to match the company’s own forecasts and it warned that third quarter orders would decline further.

Shares closed 2.7 per cent lower at €25.

French cosmetics group L’Oréal fell 3.4 per cent to €84.94 after it reported second quarter sales that came in below forecasts, as growth slowed in North America and eastern Europe.

Fresnillo, the world's largest primary silver producer, surged 5.6 per cent to 1,520p after announcing that it will produce 10 million ounces of silver and 50,000 ounces of gold in 2015 from its Saucito mine in north-central Mexico. Kazakhmys climbed 4 per cent to 1,365p. – ( Copyright The Financial Times Limited 2011/Bloomberg)