Equities climb after ECB promises banks dollars

Eurostoxx 50: 2,155.62 (+72.24) Frankfurt DAX: 5,508.24 (+168.05) Paris CAC: 3,045.62 (+96.48)EUROPEAN STOCKS rallied yesterday, as Germany and France said Greece will remain a member of the euro zone and the European Central Bank announced co-ordinated measures with the Federal Reserve to ensure banks have enough dollars.

The benchmark Stoxx Europe 600 Index advanced 2 per cent in London, extending its three-day increase to 4.5 per cent.

“The euro is a political instrument not a financial instrument and an awful lot will be done to keep the euro area intact,” said Bill Dinning, head of strategy at Kames Capital in Edinburgh. “There are a lot of challenges out there and the market is having a tough time, so we are seeing a little bit of a relief rally.”

French president Nicolas Sarkozy and German chancellor Angela Merkel said late on Wednesday they are “convinced” Greece will stay in the euro area after a phone conversation with Greek prime minister George Papandreou.

BNP Paribas, France’s biggest bank, soared 13 per cent to €30.50, the largest advance since May 2010.

Credit Agricole surged 5.9 per cent to €5.52 and Italy’s Intesa Sanpaolo rose 10 per cent to €1.05.

The banks gauge climbed even as UBS lost 11 per cent to 9.75 Swiss francs after saying it discovered a loss due to unauthorized trades in its investment-banking unit. The firm said the “matter is still being investigated” and no client positions were affected.

HM rallied 7.1 per cent to 197.90 kronor after Europe’s second-largest clothing retailer reported sales that were better than anticipated.

Louis Vuitton, the world’s largest luxury-goods maker, increased 3.4 per cent to €115.65.

Burberry rallied 6.6 per cent to 1,457p .

ArcelorMittal advanced 4.3 per cent to €13.44 after Citigroup upgraded its recommendation for the world’s largest steelmaker.

Jardine Lloyd Thompson rallied 7.1 per cent to 663p after Jardine Matheson Holdings, a Hong Kong-based investment firm, agreed to raise its stake to 40 per cent.

Aixtron sank 12 per cent to €12.43 in Frankfurt after reducing its sales forecast for 2011. – (Bloomberg)