A man walks past the London Stock Exchange in the City of London October 11, 2013.
LONDON
(Reuters) - European stocks, low-rated government bonds and the single
currency all rose on Monday as financial markets gave a tentative
thumbs-up to euro zone bank health checks.
Fewer
than one in five of the bloc's top lenders failed the tests at the end
of last year and many have since repaired their finances, results
released on Sunday showed.
The bloc's banking index rose 1 pct
(.SX7E) in early trading, powering a 0.5 pct rise in the index of top
European shares (.FTEU3). The euro nudged higher but was contained by
key German data due out at 5:00 a.m. EDT (.FRX).
Italian
and Spanish bond yields -- the bellwether for the euro zone's southern
periphery -- opened down 5 bps even though nine Italian banks fell short
in the tests, with two still needing to raise funds.
"There's
some relief this morning that there were no Spanish banks in the test
that failed. As for Italy -- that was already priced in," said Emile
Cardon, market economist at Rabobank.
While
the stress tests were slightly better than markets had expected, they
serve as a reminder that much work remains. The euro zone banking
sector's long-term attractiveness has been damaged by revelations of
extra non-performing loans and hidden losses that will dent future
profits.
"Banks
face a significant challenge as the sector remains chronically
unprofitable and must address their 879 billion euro exposure to
non-performing loans as this will tie-up significant amounts of
capital," accountancy firm KPMG noted.
Asian
equities also rose on Monday, propped up by the ECB's test results and
buoyant U.S. and British data on Friday which allayed some fears the
global economy is deteriorating.
The MSCI's broadest index of Asia-Pacific shares outside Japan closed up 0.1 percent.
Data
on Friday showed new U.S. home sales rose to a six-year high, while
Britain's economy expanded 0.7 percent in the third quarter, still on
track to outpace other advanced economies.
Elsewhere,
Brazilian markets looked set to open with big losses after incumbent
President Dilma Rousseff won the election, beating her pro-market
opponent by a narrow percent majority.
Next
Funds' Tokyo-listed Ibovespa exchange traded fund (ETF), which tracks
Brazil's equity index, dropped almost 7 percent to seven month lows.
(1325.T)
Russian stocks
rebounded 1.4 percent (.IRTS) (.MCX) after Standard & Poor's kept
the country's sovereign credit rating steady at one notch above junk,
despite fears of a downgrade.
The
rouble was flat and just off record lows against the dollar following
central bank interventions and a 35 kopeck widening in the rouble's
trading band on Friday. (RUB=)
Among
commodities, Brent crude extended losses, falling 13 cents to $86.00 a
barrel (LCOc1), after Goldman Sachs cut its price forecasts. Crude
continued on a months-long rout as signs of rising global supply
threatened deeper losses. [O/R]
Iraq increased its oil supply in October and Libya's output remains high, despite instability in both countries.
Gold edged lower as robust equity markets and strong U.S. economic data dented demand for the precious metal. [GOL/]
Spot gold (XAU=) edged down to $1,228.90 an ounce.
(Additional reporting by Sujata Rao and Marius Zaharia; Editing by Catherine Evans)
Culled from yahoo finance
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