European stocks end turbulent day up as markets assess Credit Suisse rescue
For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window
Market turbulence won't stand in way of ECB's inflation fight - Lagarde
European banks gains 1.3% as Credit Suisse rescue eases crisis
STOXX 600 reverses course and rises 1.0%
Adds comment; updates prices, details
By Sruthi Shankar and Bansari Mayur Kamdar
March 20 (Reuters) -European stocks reversed sharp early losses and rose on Monday as banking stocks rebounded from three-month lows sparked by UBS' shotgun deal to buy Credit Suisse for a fraction of its market value.
The pan-European STOXX 600 index .STOXX gained 1.0% by the close, after having fallen nearly 2% earlier in the day.
Banking shares .SX7P rose 1.3% after UBS Group's UBSG.S state-backed takeover of Credit Suisse CSGN.S appeared to close off one source of worry for the global banking sector.
"The fact that the takeover by UBS has happened so swiftly, that the bank didn't collapse and it was a corporate takeover as opposed to a governmental or regulatory bailout has obviously made markets feel a little better about the situation for the banking sector," said Danni Hewson, head of financial analysis at AJ Bell.
Credit Suisse shares slumped 55.7% after rival UBS said it will pay 3 billion Swiss francs ($3.23 billion) for the 167-year-old bank and assume up to $5.4 billion in losses.
Shares of UBS rose 1.3% after falling as much as 16% in a volatile session.
Lender-heavy indexes of Spain .IBEX and Italy .FTMIB added 1.3% and 1.6%, outperforming regional peers.
Investors were still concerned by news that Credit Suisse's additional tier-1 bonds - or AT1 bonds - with a notional value of $17 billion will be valued at zero, angering some of the holders of the debt who thought they would be better protected than shareholders.
"We are surprised how they are going about this AT1 capital," said Teeuwe Mevissen, senior macro strategist at Rabobank.
"If you look at the seniority of both, equity holders should be the first ones to lose their money. Now doubt has been cast on this principle ... markets participants are confused and the decision comes with a lot of uncertainty."
Miners .SXPP led sectoral gains on Monday, advancing 2.8% tracking firm copper prices on aweakening dollar and signs of improving demand from top consumer China.
Meanwhile, ECB President Christine Lagarde said financial market turbulence will not stand in the way of the European Central Bank's fight against inflation as it has separate tools to fight both issues.
All eyes will be on the Federal Reserve's policy decision on Wednesday, with traders largely divided on whether the U.S. central bank will hike interest rates by 25 basis points or leave it unchanged. FEDWATCH
The benchmark STOXX 600, which racked up a 10% year-to-date gain at one point, is up just 3.7%so far this year after the collapse of Silicon Valley Bank and Signature Bank SBNY.O and troubles at Credit Suisse fuelled worries about the health of the global banking system.
Banking system stresses heightenedhttps://tmsnrt.rs/3FwzVDp
Tale of two bankshttps://tmsnrt.rs/3n1xPVC
Reporting by Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru; Editing by Sherry Jacob-Phillips, Anil D'Silva and Christina Fincher
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
