European banks are surging for the first time in more than a week

European markets are surging for the first time in over a week, as banking stocks pop following massive falls so far this year. The market rally comes despite a rough day in Asian trading and continuing fears about the state of the global economy.

An hour and three quarters after the open, shares across the continent’s biggest stock indexes are uniformly in the green, with Italy’s FTSE MIB leading the way.

Italy’s stock market has been getting crushed in recent weeks as banking stocks in the country tumble, thanks to fears about the levels of bad debt held in financial institutions. Italy’s benchmark index has fallen 21% since the start of 2016.

However, on Wednesday some of that fear seems to be seeping away, with the MIB up around 3.7%, and banking stocks topping the index. Three banks; Unicredit, Intesa Sanpaolo and Banca di Milano are amongst the top five gainers, with Exor, an investment firm, and Unipol, Italy’s second biggest insurer, making up the rest of the top 5.

Banking stocks across Europe have taken heavy losses so far in 2016, with Deutsche Bank, Commerzbank, HSBC, and Royal Bank of Scotland all down as much as 20% on the year.

Take a look at how Italy’s stock market is doing today:

In Britain, the FTSE 100 is ticking higher, although it is the only major European market with gains of less than 1% today. Financial and insurance stocks, including Prudential, Man Group, and Old Mutual are leading the gains, with shares in the UK’s biggest supermarket also surging, up around 4% to £1.807 per share. Overall, the index is up 0.9%, taking it to around 5,680 points.

Here’s the scoreboard for the rest of Europe, so far on Wednesday:

  • Germany’s DAX 30 — up 1.63%
  • Spain’s IBEX 35 — up 2.57%
  • France’s CAC 40 — up 1.83%
  • Eurostoxx 50 — up 1.91%
  • The Netherlands’ AEX — up 1.3%

The renewed pop in European markets doesn’t seem to have any real basis, with banking fundamentals unchanged, and markets elsewhere in the world struggling.

As Mike van Dulken from Accendo Markets puts it, the rally “comes after a break-even US session and despite weakness in Asia where both Japan’s Nikkei and the Aussie ASX dropped into bear market, down 20% from their last peaks with financials and commodity-linked names under pressure from fears of global recession and another banking sector crisis.”

Elsewhere in markets, oil is on the rise. Overnight and early this morning, oil has rallied, having fallen below $28 per barrel during trading on Tuesday. At 9:45 a.m. GMT (4:45 a.m. ET) both major benchmarks are more than 2% up. WTI is trading at $28.52, up 2.1%, while Brent crude is up 2.1% to $30.96.

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