European shares rebound as banking jitters ebb on SVB deal

European stocks climbed on Monday as a sense of calm returned to markets following a week of turbulence over concerns about banking sector stability after the collapse of Credit Suisse and two US mid-sized lenders.

The pan-European STOXX 600 index rose 1.1 per cent, with investors drawing comfort from news that First Citizens Bancshares would acquire Silicon Valley Bank’s deposits and loans.

European banks rose 1.4 per cent after shedding 3.8 per cent on Friday, when Deutsche Bank sparked a rout in the sector. Shares of that German lender were up 6.2 per cent after tumbling 8.5 per cent on Friday. Shares of Swiss bank UBS, which took over Credit Suisse in a rescue deal last week, rose 1.1 per cent.

Credit Suisse inched up 0.5 per cent as the Swiss financial regulator, Finma, said over the weekend it was considering whether to take disciplinary action against the bank.

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“Many investors still don’t want to touch the banking sector for fears there is more distress to come,” Russ Mould, investment director at AJ Bell, said. “Yet for every bleak situation, there is always someone who sees an opportunity to make money, hence why we’re seeing a rise in the share price of many European banks today.”

DUBLIN

A better day all round for financials saw AIB and Bank of Ireland rise 1.1 per cent and 0.5 per cent respectively, but Permanent TSB fell by 0.8 per cent.

As Glenveagh’s annual report showed the firm’s top executives enjoyed bumper salary increases last year, the company’s shares traded down 1.1 per cent at 99 cent. Rival homebuilder Cairn Homes saw its shares rise 0.4 per cent to €1.02.

Building materials giant and Iseq heavyweight CRH traded up 1.4 per cent at €44.67 as global markets lifted after last week’s turbulence. Ryanair was also up by 1.2 per cent at €14.28.

LONDON

Stocks recovered some ground on Monday as fears eased slightly over uncertainty in the banking sector. Barclays was among London’s top performers as the FTSE 100 swung back after a weak end to last week. It came as traders welcomed a takeover of Silicon Valley Bank’s US loans and deposits. The FTSE 100 moved 0.9 per cent, or 66.32 points, higher to finish at 7,471.77.

Michael Hewson, chief market analyst at CMC Markets UK, said: “As a new week gets under way we’ve seen a modest easing in the banking sector angst of the last few days, with a much better tone after the sell-off at the end of last week.

In company news Mexican restaurant chain Tortilla wrapped up a flat session despite swinging to a loss last year as it came under pressure from “unprecedented” food and energy costs.

Revenues jumped by a fifth to a record £58 million in 2022 after it opened 18 new restaurants across the UK, but the company, which acquired rival Mexican chain Chilango last year, made a pre-tax loss of £600,000 over the year. Shares in the company closed at 120p.

EUROPE

Healthcare stocks were the top gainers in Europe, rising 1.9 per cent. Novartis climbed 7.7 per cent after the Swiss drugmaker said its Kisqali breast cancer drug had been shown to cut the risk of recurrence in women who were diagnosed at an early stage.

European stocks are looking to end the first quarter of the year with gains, buoyed by signs of economic resilience and hopes that central banks are near the end of their tightening cycles. However, European banks are set to end the quarter nearly flat amid the banking sector turmoil.

“Even though Mr Powell, Ms Lagarde, Mr Bailey and Mr Jordan kept their policy stance unchanged despite the mounting stress in banks, if other banks, the size of Deutsche Bank, get sucked into this confidence crisis we could well see the interest rate expectations point more seriously at a pivot in major central banks’ tightening plans,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.

French telecom company Orange rose 2.1 per cent after Morgan Stanley upgraded the stock to “overweight”.

NEW YORK

Wall Street’s main indexes cut gains on Monday as investors assessed risks to the banking sector following a buyout deal for Silicon Valley Bank’s assets, while a rise in Treasury yields pressured rate-sensitive technology and other growth stocks.

First Citizens BancShares will acquire parts of Silicon Valley Bank, which collapsed earlier this month in the largest bank failure since the 2008 financial crisis, unleashing fears about a liquidity crunch in the sector.

First Citizens’ shares jumped 47.6 per cent, while First Republic Bank rose 15.4 per cent following a report that US authorities were considering more support for banks.

While the buyout of SVB’s assets had lifted sentiment earlier in the day, the three main indexes came off session highs after news that cryptocurrency exchange Binance and its CEO, Changpeng Zhao, were being sued over regulatory violations.

Shares of major US banks JPMorgan Chase & Co, Citigroup and Bank of America, however, held on to gains of between 1 per cent and 3 per cent.

Tesla rose 2 per cent with Barclays expecting the electric carmaker’s first-quarter deliveries to beat estimates. – Additional reporting by Reuters/PA