European Stocks Close Higher As Efforts To Address Banking Turmoil Lift Sentiment

(RTTNews) - European stocks shrugged off early weakness and surged higher on Monday, with investors reacting to extensive efforts by central bankers and governments to address turmoil in the banking sector.

The government-backed acquisition of Credit Suisse by UBS Group, and the Federal Reserve's announcement that it has joined with other central banks to take coordinated action to enhance the provision of liquidity via the standing U.S. dollar liquidity swap line arrangements helped lift investor sentiment.

European Central Bank President Christine Lagarde's assurance that Eurozone banks have capital and liquidity levels well beyond their requirements contributed as well to the positive mood in the markets.

World's major central banks announced a joint effort to prevent the banking crisis from spreading after the Swiss bank UBS decided to acquire the troubled rival Credit Suisse in a deal brokered by the Swiss authorities.

The pan European Stoxx 600 ended 0.98% up. The U.K.'s FTSE 100 gained 0.93%, Germany's DAX climbed 1.12% and France's CAC 40 surged 1.27%, while Switzerland's SMI gained 0.28%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain and Sweden closed notably higher.

Iceland and Turkiye ended weak.

In the UK market, Anglo American Plc, Fresnillo, Antofagasta, Endeavour Mining, Glencore and IAG gained 3.3 to 5%.

BAE Systems, Frasers Group, Mondi, 3I Group, Aviva, Smufit Kappa Group, Vodafone Group, Rio Tinto, Beazley and British Land gained 2 to 3%.

Standard Chartered ended lower by 3%. Barclays drifted down 2.3%. Centrica and Scottish Mortgage both ended lower by about 1.3%.

In the German market, Siemens Energy, Hannover Rueck, Munich RE, Deutsche Boerse, Puma, HeidelbergCement, E.ON and Commerzbank surged 2.3 to 4%.

Deutsche Post, Deutsche Telekom, Daimler, Allianz, Adidas, Siemens and RWE also ended sharply higher.

Porsche, Zalndo, Qiagen, Fresenius Medical Care and Sartorius lost 1 to 2%.

In Paris, Thales, AXA, LVMH, Kering, BNP Paribas, Publicis Groupe, Air Liquide, Unibail Rodamco, Vivendi, Hermes International, L'Oreal, Airbus, Essilor, Vinci and Carrefour gained 1.5 to 3%.

In the Swiss market, Credit Suisse shares plunged nearly 56%. UBS Group shares gained about 1.3%, recovering after a sharp setback.

On Sunday, UBS agreed to take over the Credit Suisse in an all-share deal worth $3.25 billion under pressure from the Swiss authorities.

Credit Suisse, a 167-year old bank and the second largest in Switzerland, had been facing issues due to scandals, irregularities and management troubles for a long time.

In economic news, Germany's producer price inflation eased for the fifth straight month in February to reach its lowest level in nearly one-and-a-half years amid a continued slowdown in energy prices, preliminary data from Destatis showed.

The producer price index, or PPI, climbed 15.8% year-over-year in February, which was slower than the 17.6% rise in January. Economists had forecast the price growth to ease to 14.5%.

The latest inflation rate was the weakest since September 2021, when prices had risen 14.2%.

Euro area trade deficit narrowed at the start of the year as the pace of fall in imports exceeded the decline in exports, official data revealed Monday. The deficit on trade in goods decreased to a seasonally adjusted EUR 11.3 billion in January from EUR 13.4 billion in December, Eurostat reported.

The German economy is likely to fall in the first quarter but the decline will be slower than in the final quarter of 2022, Bundesbank said in its monthly report.

The largest euro area economy had contracted 0.4% in the fourth quarter of 2022. The second consecutive quarter of contraction suggests that the economy entered a technical recession.