Frankfurt: European shares rose for a third straight session on Monday, with financials the major gainers as investors trained their sights on a US Treasury plan to buy toxic assets from banks.
By 4pm, the pan-European FTSEurofirst 300 index of top shares was up 1.6% at 729.02 points. However, the FTSEurofirst 300 index is still down around 12% for the year.
“Investors are waiting for details of the Treasury department plan for the problem assets in the US banks. There is also talk of a bigger stimulus package in Japan and in China there is talk the authorities want to promote consolidation in the auto and steel sectors that could be seen as bullish for profitability,” said Bernard McAlinden, market strategist at NCB Stockbrokers.
Bank stocks were higher. Barclays gained over 9% after private equity group Hellman & Friedman, Bain Capital and TPG showed interest in buying its iShares business.
Credit Suisse, Societe Generale, Banco Santander, BNP Paribas and UniCredit were up 1.9% to 5.5%.
According to a Washington official, the government will put in $75 billion to $100 billion from its bailout fund to team up with private investors and buy toxic assets from banks in a move to thaw frozen credit markets and revive the recession-hit economy. Treasury Secretary Timothy Geithner is due to release details of the plan at 6pm on Monday.
“Investors are slowly beginning to believe that the various plans from the governments will work. Markets have been sold down too far and now are adjusting to a better norm ... particularly in the financial sector. There is a little bit of confidence out there this morning,” said Howard Wheeldon, strategist at BGC Partners.
Daimler rose 6.1% after Abu Dhabi government-linked Aabar Investment completed a $1.82 billion capital hike on Monday after taking a 9.1% stake in the group to become the top stakeholder in the German carmaker.
Energy stocks also gained as crude jumped 1.5%, BG Group, BP, Royal Dutch Shell and Total were up 0.8 percent to 2.3%.
Miners were higher as copper rose 3%. Rio Tinto was up 5% as the Daily Mail said the group is preparing to hand unprecedented boardroom power to its Chinese backer.
Xstrata was 0.7% higher after the Wall Street Journal said acquisition opportunities are developing in the mining sector, with share prices weak and some companies being forced to sell assets.
Later investors will eye US existing home sales for February with economists in a Reuters poll expecting sales to come in at an annual rate of $4.45 million, down from $4.49 million in January.
Across Europe, the FTSE 100 index was up 2%, Germany’s DAX was 1.8% higher and France’s CAC 40 was up 1.3%.