Left Menu
Development News Edition

UPDATE 1-Italian stocks, banks surge as government seen bowing to budget pressure


Italian stocks jumped on Monday on accumulating signs of a climbdown from the Italian government whose budget deficit plans had set it on course for disciplinary action from the European Union.

The governing coalition is discussing reducing next year's budget deficit target to as low as 2 percent of gross domestic product from the draft budget target of 2.4 percent of GDP, a government source said on Monday.

The pan-European STOXX 600 climbed 1.3 percent, leading euro zone stocks jumped 1.5 percent, and Italy's FTSE MIB led the way with a 3.1 percent gain.

Italy's banks index jumped 5.3 percent, on track for its strongest day since June.

A drop in Italian bond yields to two-month lows drove the relief rally in lenders which have large sovereign bond portfolios.

"You potentially move from a negative spiral to a more positive spiral where you end up with less pressure on the banks, more ability to lend and that will underpin growth in a better fashion," said Pierre Bose, head of European strategy at Credit Suisse Wealth Management.

Unicredit and Intesa Sanpaolo were among top Italian gainers, up 5.9 and 5.4 percent respectively. Lenders UBI Banca, Banco BPM, BPER Banca , and Mediobanca rose 4.6 to 7 percent.

The Italian banks' gains were amplified by large short positions investors have been building up on the stocks in recent weeks.

Europe's banks index jumped 2.4 percent, on track for its strongest day since July 2017.

But investors warned the signs of a compromise from the Italian government weren't necessarily a silver bullet.

"There's a little bit more conciliatory talk, but the fine print remains key in the sense that cutting it by 0.3 or 0.4 will help potentially prevent an excessive deficit procedure but the broader vulnerability to weakness in growth in Italy remains," said Bose.

Outside politics, dealmaking and results drove the biggest moves.

Saint-Gobain shares jumped 5 percent after the construction materials group launched a new business strategy and management structure which it said would improve margins and result in more cost savings.

Eurofins Scientific rose 5.3 percent after the laboratory testing firm reduced its financing costs and extended its organic growth objectives beyond 2020, and Berenberg raised the stock to "buy" from "hold".

In the small-cap space, Faroe Petroleum shares surged 25.8 percent after Norway's DNO offered to buy it for 152 pence per share in cash - a 20.8 percent premium to its Friday closing price - valuing it at 607.9 million pounds ($779.81 million).

DNO shares gained 3.5 percent.

Melrose Industries meanwhile tumbled 4.8 percent after a Sky News report that the industrial company may shelve its auction for the sale of recently acquired GKN's Powder Metallurgy unit after it received lower-than-expected bids for it.

Dutch marine engineer Boskalis gained 3.7 percent after it said it had signed a multi-year deal with Saudi Aramco to work on its offshore facilities.

Boskalis would act in a consortium with Lamprell, whose shares also jumped 8.9 percent on the deal win.

(Reporting by Helen Reid; Editing by Josephine Mason and Janet Lawrence)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Download The Devdiscourse News App for Latest News.


TRENDING

OPINION/BLOG/INTERVIEW

Top 10 Fake News, Myths and Realities on 2019 Novel Coronavirus COVID 19

With nearly 1500 deaths by January 14 and around 65,000 infections in China, the Novel Coronavirus 2019 has become one of the worst health epidemics of the 21st Century. However, 8,573 people have been cured but the rumor mongers are a...

Handling fake news Infodemic in time of Coronavirus epidemic

Social media has provided a platform where everybody can disseminate his her views without any supervision. Its excellent if the message is genuine but misinformation is equally disastrous. Health is such a topic where every Tom and Harry c...

Sentiment Analysis on Budget 2020: Long shot for solution to economic worries?

Industries and individuals alike had high expectations from the government to take tangible steps but the budget 2020 seems to have failed expectations....

How can technology help the future of mobility?

More than a billion people or one-third of the global rural population lacked access to all-season roads and transport services in 2016, subsequently hindering the socio-economic development....

Videos

Latest News

Italy govt wins lower house confidence vote on new motorway rules

The Italian government on Wednesday won a confidence vote in the lower house of parliament on a decree which includes new rules that make it easier and less costly for the state to revoke motorway concessions.The move comes as the ruling co...

Indonesian military say Papuan separatist killed in shootout

Indonesian security forces shot dead an 18-year-old Papuan separatist during a shootout, a military spokesman said on Wednesday, though a separatist group disputed the account and said the victim was a civilian. Remote Papua, the countrys e...

Air France faces new strikes over domestic network cuts

Air France unions have called for strikes at domestic carrier Hop, as pilots seek an improved pay offer and ground staff representatives press for job guarantees, union officials said on Wednesday. The strike calls, reported earlier by Fren...

Seventy-five years after Iwo Jima, grenade blast etched in memory of 104-year-old former Marine

On the 75th anniversary of the U.S. Marines landing on Iwo Jima, 104-year-old William White still has vivid memories of the exploding grenade that nearly ended his solo reconnaissance mission during one of World War Twos fiercest battles.Wh...

Give Feedback