Short-selling ban sparks surge in banking stocks

Eurostoxx 50:2,307.33 (+91.88) Frankfurt DAX:5,997.74 (+200.08) Paris CAC:3,213.88 (+124.22)

EUROPEAN STOCKS climbed yesterday, extending the Stoxx Europe 600 Index’s rally from a two-year low, as France, Spain, Italy and Belgium imposed short- selling bans.

A gauge of European banks increased 4.3 per cent, for its second day of gains.

The Stoxx 600 jumped 3.5 per cent in London as 30 stocks rose for every one that fell.

“The ban will cause a short-term rally,” said Manish Singh, head of investment at Crossbridge Capital in London.

“The authorities can ban short selling, but they can’t ban the spate of bad news on the economy from hitting the tape. A robust response that addresses long-term structural concern is needed to restore confidence to the markets,” he said.

Bans on short selling were imposed from yesterday to stabilize markets after Société Générale dropped to its lowest price since March 2009 on August 10th.

Société Générale jumped 4.4 per cent to €24.01 in Paris. Even so, France’s second-largest lender has retreated 13 per cent this week.

Dexia, Belgium’s largest bank by assets, surged 17 per cent to €1.80, its biggest gain since March 2009.

KBC Groep rose 9.6 per cent to €20.90.

UBS, Switzerland’s biggest bank, advanced 5.7 per cent to 11.67 Swiss francs, while Barclays jumped 5.3 per cent to 187.2p.

Lloyds rallied 5 per cent to 33.8p.

Banco Santander, Spain’s largest lender, climbed 6.6 per cent to €6.40.

Swiss insurers led a gauge of European insurance companies higher, for one of the best industry performances in the Stoxx 600, a 4.5 per cent rally.

Zurich Financial Services, Switzerland’s largest insurer, surged 7.1 per cent to 171.50 Swiss francs and Swiss Life Holding soared 7.4 per cent to 99.90 Swiss francs.

CNP Assurances rose 8.2 per cent to €12.30, while Allianz, Europe’s biggest insurer, climbed 5.3 per cent to €76.51.

Aegon, the Dutch owner of US insurer Transamerica, rallied 8.9 per cent to €3.11.

Meyer Burger Technology, a maker of solar-panel manufacturing equipment, surged 6.2 per cent. – (Bloomberg)