By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets rose for a second
straight day on Monday as fears about the soundness of Portuguese
banks continued to recede.
The Stoxx Europe 600 index picked up 0.9% to close at 339.79,
after last werek posting its biggest weekly percentage loss since
March.
Last week's losses came as Portuguese conglomerate Espírito
Santo International SA missed an interest payment, sending shivers
through Portugal's financial sector and spurring fears about the
rest of the Espirito Santo empire.
Trading in Banco Espírito Santo SA was suspended late last week.
On Monday, shares slid 7.5% even as the bank appointed Vítor Bento,
a well-respected economist, as its new chief executive in an effort
to restore confidence in the company. Pedro Passos Coelho,
Portugal's prime minister, over the weekend ruled out any potential
state support for the lender and said "private businesses have to
suffer the consequences of the bad deals they make," according to
Financial Times.
"It's hardly surprising that, just five years on from the worst
global banking crisis in recent memory, the market has the scope to
overreact to banking-contagion fears," said David White, trader at
Spreadex, in a note.
Portugal's PSI 20 index rose 0.6% to 6,181.73, and Portuguese
government bonds also continued to rise, sending the yield on
10-year government paper down 5 basis points to 3.79%.
European movers
Elsewhere, France's CAC 40 index gained 0.8% to 4,350.04.
Germany's DAX 30 index rallied 1.2% to 9,783.01, a day after the
country won the World Cup title in soccer against Argentina.
The U.K.'s FTSE 100 index added 0.8% to 6,746.14. Shire PLC
gained 0.7% after a revised offer from AbbVie Inc. (ABBV). Shire
said it would be willing to recommend the takeover proposal to
shareholders.
Shares of Tesco PLC (TSCDY) climbed 2.3% in London after Cantor
Fitzgerald lifted the grocery chain to buy from sell, according to
Dow Jones Newswires.
Shares of Sports Direct International PLC put on 3.6% after the
retailer said it formed a partnership with MySale Group to push
into the Australian and New Zealand markets.
Drax Group PLC jumped 4.4% after a favorable High Court ruling
that could help get one of the company's power plants a subsidy
from a renewable-energy program.
In data news, euro-zone industrial production slumped 1.1% in
May from April, marking the largest month-to-month drop since
September 2012 and highlighting the continued economic weakness of
the currency bloc. The report comes after France, Italy and Germany
all posted disappointing data last week.
Later in the week, German's ZEW report, euro-zone trade data and
inflation numbers will provide further insights into the strength
of the region's recovery. U.K. labor market figures are also out on
Wednesday. Read: Move over Portugal, Germany is Europe's real
concern this week
After the markets close on Monday, European Central Bank
President Mario Draghi speaks to the European Parliament in
Strasbourg. The ECB boss is expected to confirm that the governing
council stands ready to act with a full-blown quantitative-easing
program if needed and focus on keeping a lid on further euro gains,
according to Simon Smith, chief economist at FxPro.
The euro (EURUSD) traded at $1.3626, up from $1.3609 late on
Friday.
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