Leading airlines staged a rebound as European Union ministers confirmed plans to provide war risk liability insurance in an effort to avert what some analysts warned could be a disaster for the industry.
Governments were spurred to action over the weekend to keep airlines flying after insurance companies withdrew adequate war risk insurance cover. Shares in airlines have slumped since the terrorist attacks on New York and Washington a fortnight ago.
The Datastream European Airlines index tumbled almost 32 per cent in the 11 days to last Friday. Swissair was yesterday's outstanding performer, soaring almost 30 per cent in early trade as it announced a radical business plan and the government undertook to establish a working group on the airline.
Air France gained 19.5 per cent to €10.75. Lufthansa gained 3.5 per cent to €9.19 and Alitalia rose 6.5 per cent to 66 cents. KLM picked up just 2.3 per cent to €8.85 as it began charging an extra fee to help cover the cost of the extra safety measures it has introduced.
Big Swiss banks were sharply higher after the Swiss National Bank unexpectedly cut key interest rates by 50 basis points, citing the strength of the Swiss Franc. CS Group jumped 11.4 per cent to SFr49.90 and UBS climbed 8.5 per cent to SFr57.40. Deutsche Bank gained 12.2 per cent to €54.40 and Zurich Financial Services was 15.1 per cent higher at SFr297 as investors welcomed the sale of US asset manager Scudder to Deutsche.
The Italian banking sector was busy with Banca Fideuram soaring 15.8 per cent to €5.90 and Banca Intesa 9.3 per cent ahead at €2.42 after both were suspended early in the day for excessive gains. Many technology shares bounced sharply from three-year lows. Nokia and Alcatel were up 8 per cent and there were rises of 9 to 10 per cent for Ericsson, SAP, Dassault Systemes and Thomson Multimedia.
