Business World

Sunday 27 May 2018

European shares gain as financial stocks get boost on rate hopes

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange (NYSE)

Reuters

European shares generally rose yesterday. Gains were underpinned by a rally among banks, energy stocks as well as telecoms firm BT, as attention turned to closely-watched US jobs data.

The pan-European STOXX 600 index was up 0.7pc, a third straight session of gains.

Eurozone banking stocks rose, extending their rally from the previous session and hitting their highest level in more than a year on expectations of future policy tightening from the European Central Bank.

Money markets are now pricing in an ECB interest rate hike by March 2018.

The STOXX banking index also gained and was the top sectoral performer. Banco BPM, Bank of Ireland and UniCredit were among top gainers.

"Higher yields mean that (financials) will have better prospects for revenues, less pressure on their shoulders to generate revenues and that's all good news for financials," said Ipek Ozkardeskaya, a senior market analyst at London Capital Group. In Ireland, the ISEQ Overall Index closed 0.3pc higher at 6,678.48.

Eir, tipped as an IPO candidate, completed a refinancing of its €1.6bn senior loan facility following a deal led by Goldman Sachs. Eir will save €12m a year in interest after reducing the interest rate on the debt to 3.25pc over euribor from 4pc. The debt was taken up by a mix of new and existing lenders. Shares in Bank of Ireland advanced 5.1pc to 25 cent on the back of that wider gain by financial stocks.

Shares in biotech investment firm Malin, headed by former Elan chief executive Kelly Martin, rose 3.5pc to €10.20. Paddy Power Betfair continued to fare well, rising 1.7pc to €100.95. Modest declines were recorded by Irish Continental, which slipped 1.6pc to €4.98.

The UK's FTSE-100 was 0.38pc higher. Germany's DAX dipped 0.1pc and France's CAC-40 rose 0.24pc.

Irish Independent

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