Forexpros – European stock markets remained higher on Monday, as investors were hopeful that Greece will not be forced out of the euro zone as recent opinion polls placed pro-austerity party New Democracy in first place of the June election race.
During European afternoon trade, the EURO STOXX 50 rose 0.42%, France’s CAC 40 climbed 0.80%, while Germany’s DAX 30 advanced 0.51%.
Market sentiment found support as opinion polls on Sunday showed that Greece’s conservative party New Democracy swung into first place ahead of next month’s elections, as the country’s socialists claimed that European leaders are warming to the idea that bailout terms for Athens should be softened to ease pressure on the economy.
Uncertainty remained however, as talk of contingency plans have emerged in case Greece leaves the euro zone, posing severe contagion risks to the whole monetary union.
Financial stocks remained mixed as Dutch lender ING Group surged 1.79%, France’s Societe Generale climbed 1.35% and German Deutsche Bank added 0.82%, while Spanish lenders BBVA and Banco Santander plummeted 1.62% and 2.06 % respectively.
Concerns over the health of Spain’s banking sector continued to weigh after Spain’s government announced Sunday that it was to recapitalize one of the country’s largest commercial lenders, Bankia.
Bankia shares were suspended on Friday, shortly before it announced it made a loss of EUR3 billion in 2011 and was seeking government aid.
Separately, Standard & Poor’s cut the credit ratings of Bankia, Banco Popular and Bankinter to junk on Friday, citing Spain’s weakening economy. The rating company had downgraded 11 Spanish banks on April 30.
Meanwhile, steel company ArcelorMittal saw shares advance 2.45% after announcing that it is to supply 8300 tons of rail for EUR8.4 million for Invensys Rail Dimetronic’s first Westrace 2.0 interlockings project in Spain at Lasarte and Anorga, on the EuskoTren’s Bilbao – San Sebastian route.
In London, FTSE 100 rose 0.88%, supported by strong gains in financial and mining stocks.
Lloyds Banking led gains, with shares soaring 3.45%, and the Royal Bank of Scotland jumped 2.01%, while Barclays climbed 1.34%. HSBC Holdings was steady, on the other hand, edging down 0.06%.
Mining giant Rio Tinto also surged 3.50%, while Bhp Billiton and Anglo American jumped 2.45% and 2.22% respectively.
Copper producers Xstrata and Kazakhmys extended earlier gains, as shares climbed 2.90% and 2.85%.
Elsewhere, maker of engineering software products, Aveva Group Plc skyrocketed 11.07% after reporting full-year revenue of GBP195.9 million, topping the average analyst estimate of GBP192.2 million. Chief Executive Officer Richard Longdon said, “We are confident about the prospects for 2012-13.”
Earlier Monday, Spain’s Treasury auctioned the full targeted amount of EUR3.5 billion of two-year bonds, but the yield climbed to 4.03%, up sharply from 3.35% at a similar auction in April.
Trade looked likely to remain quiet on Monday, with some markets in Europe closed for holidays, while U.S. markets were to remain closed for the Memorial Day holiday.
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