Europe close: Banks extend gains heading into ECB meeting
By Alexander Bueso
Date: Wednesday 07 Dec 2016
(ShareCast News) - Equities in the single currency bloc finished sharply higher amid expectations the European Central Bank would extend its quantitative easing programme on Thursday and following reports of a possible bailout for Italy's Banca Monte dei Paschi di Siena.
The benchmark Stoxx Europe 600 index was up 0.91% by the close, Germany's DAX gained 1.96% and France's CAC 40 rose 1.36%. Italy's FTSE MIB was 2.10% higher.
Meanwhile, oil prices retreated, with West Texas intermediate for delivery in January down 1.7% at $50.09 per barrel and Brent crude off 1.22% at $53.28.
Shares in Banca Monte dei Paschi di Siena were up 10.79% after La Stampa reported that Italy could ask for a €15bn European Stability Mechanism loan to help not just Paschi but also some of the country's other struggling banks. Late on Tuesday, Reuters reported that Italy was preparing to take a €2bn controlling stake in Monte dei Paschi.
The FTSE Italia banks all-share index rose 4.46%, while the Stoxx 600 sub-index for the banking sector was up 2.27%.
On the data front, German industrial production rose less than expected in October, according to figures released by Destatis.
Industrial activity was up 0.3% from September, when it dropped a revised 1.6%, missing expectations for a 0.8% increase.
On the corporate front, Credit Suisse rallied after announcing plans to cut costs further and downgrading its targets.
Shares in HSBC and Crédit Agricole edged higher despite the European Commission issuing the two banks, along with JP Morgan, a fine of €485m for participating in a cartel in euro interest rate derivatives.
The European Union's executive arm said the banks had breached EU antitrust rules by colluding on the key euro interest rate derivative pricing elements and exchanging sensitive information via corporate chat-rooms and instant messaging services.
German car maker Siemens advanced as it announced its plans to target double-digit annual growth at its digital businesses each year through 2020 as part of its efforts to build up its software capabilities.
Belgian chemicals company Solvay gained after selling its Acetow unit, which makes substances for cigarette filter producers, to private equity firm Blackstone group for around €1bn.
Train and bus operator Stagecoach was on the front foot after it hiked its interim dividend to show its confidence in the future and keep investors chipper as profits and earnings fell in the face of what it said was a continuing "challenging and uncertain" political and economic environment.
Accounting software company Sage pushed up as it confirmed that it is "evaluating potential strategic options" for the payments business in North America, including a sale, but stressed that there could be "no certainty" that the evaluation would lead to any action.
FTSE 250 provider of global mobile satellite communications Inmarsat gained after signing a contract with Air New Zealand to provide Global Xpress connectivity across the airline's long-haul and short-haul fleets.
Miner Rio Tinto was a high riser as Credit Suisse upgraded the stock to 'outperform' from 'neutral'.
PostNL shares tumbled after it rejected the fourth and final offer made by Belgian peer Bpost, which valued the group at €2.7bn.
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