Hopes of euro zone debt solution lifts equities

Eurostoxx 50: 2,330.08 (+23.27) Frankfurt DAX: 5,913.53 (+36.12) Paris CAC: 3,157.34 (+16.24)BANKS LED the advance on European equity markets yesterday, continuing their volatile ride as hopes were reignited that solutions to the crisis in the euro zone will soon be announced.

Italy’s FTSE MIB index was the standout gainer among European bourses, climbing 2 per cent to 16,293.19.

A number of the country’s banks had their ratings cut by Standard and Poor’s late on Tuesday, but the move did not surprise investors.

A downgrade of Spanish sovereign debt by Moody’s, the third rating agency to do so, was also priced into the market, as Spain’s IBEX 35 index climbed 0.4 per cent.

Unicredit advanced 5.2 per cent to €0.96, though Italy’s largest bank by assets had €245 million seized by police as part of a probe into allegations of tax fraud.

Rival Intesa Sanpaolo surged 7.3 per cent to €1.34.

French financials were among the big winners on the FTSE Eurofirst 300.

BNP Paribas jumped 6.2 per cent to €31.78, while investment bank Natixis gained 2.8 per cent to €2.25. Insurance company AXA advanced 4 per cent to €10.80.

Elsewhere, Germany’s Commerzbank and Deutsche Bank gained 4.7 per cent to €1.63 and 4.2 per cent to €27.53 respectively. Dutch financial services group ING climbed 4.1 per cent to €6.24.

Sweden’s Nordea underperformed its European peers, climbing just 0.4 per cent to SKr56.45 after it reported lower than expected third quarter profits. Norway’s biggest lender DnB NOR climbed 1.9 per cent to NKr64.35.

Sonova, the Swiss hearing aid maker, was the top gainer on the pan-European index, soaring 13 per cent to SFr86.75 after reporting better than expected six month sales and sticking to its annual targets.

Telecoms equipment makers were lower with French group Alcatel-Lucent tumbling 7.7 per cent to €1.96 as investors sold the stock ahead of its third-quarter results to be published in November.

Switzerland’s Nestlé, the world’s largest food company, edged up 0.1 per cent to SFr51.55. – (Copyright The Financial Times Limited 2011)