European bank stocks are rallying hard today.
Shares in European banks have been enduring a nasty sell-off since the Cypriot financial crisis in March sparked fears that deposit outflows could weaken the position of banking systems elsewhere in the euro zone. Yesterday, they dropped to 7-month lows.
Earlier this morning, the “troika” of international lenders at the EU, ECB, and IMF said they recommended a seven-year extension of the bailout loans given to Portugal and Ireland during the euro crisis. The proposal may be discussed at the meeting of Eurogroup finance ministers this weekend.
In Portugal, the market is up 4 per cent, and bank stocks are leading the way. Banco Espirito Santo is up 10.8 per cent, Banco BPI is up 10.7 per cent, and Banco Comercial Portugues is up 9.3 per cent.
Italian banks are moving higher as well. The overall market is up 2.4 per cent, led by Banco Popolare (+8.2 per cent), Banco Popolare dell’Emilia Romagna (+6.3 per cent), and Monte dei Paschi (+6.2 per cent).
In Spain, Bankinter and Banco Popular are up 7 per cent and Banco de Sabadell is up 5.9 per cent, and in France, Crédit Agricole and Société Générale are both up 6.3 per cent, while BNP Paribas is up 5.2 per cent.