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European Bank Stocks Soar on EU Package to Halt Greek Crisis July 5, 2010

Posted by Yilan in EU, European Union, Yunanistan.
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European banks jumped the most in 20 months after the European Union unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases seeking to halt Greece’s debt crisis from spreading.

The Bloomberg Europe Banks and Financial Services Index added 10.93, or 11 percent, to 110.73 at 9:42 a.m. central European time, led by Spanish, Portuguese, Greek and French banks. That represents the steepest gain since Sept. 19, 2008.

Jolted by last week’s slide in the euro and soaring bond yields in Portugal and Spain, the governments of the 16 euro nations agreed to lend as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank said it will counter “severe tensions” in “certain” markets by purchasing government and private debt.

“Together, these measures should be sufficient to get rid of the liquidity risk that threatened to cut Portugal and Spain off from the capital market,” Johan Javeus, an analyst at SEB AB in Stockholm, said. “The lower liquidity risk is positive for more illiquid and risky assets such as shares.”

Banco Santander SA, Spain’s largest bank, jumped 17 percent to 9.05 euros while Banco Bilbao Vizcaya Argentaria SA soared 16 percent to 9.305 euros. National Bank of Greece SA advanced 16 percent to 11.99 euros while Portugal’s Banco Comercial Portugues SA jumped 13 percent to 0.707 euro. BNP Paribas SA, France’s largest bank, gained 17 percent to 51.31 euros. Italy’s UniCredit SpA advanced 15 percent to 1.879 euros.

Barclays Plc, the U.K.’s third-largest bank by assets, led British banks higher. The lender surged 12 percent to 319 pence, while HSBC Holdings Plc, Europe’s biggest bank, gained 6.9 percent to 673.2 pence. Royal Bank of Scotland Group Plc, the U.K.’s largest government-owned bank, climbed 8.6 percent to 49.41 pence.

“This truly is overwhelming force and should be more than sufficient to stabilize markets in the near term, prevent panic and contain the risk of contagion,” Marco Annunziata, chief economist at UniCredit Group in London, said in a note.

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