Europe close: Italian banks continue to bounce back strongly
European stocks advanced further as investors priced in a rate hike by the Federal Reserve and welcomed a restructuring plan by Italy's UniCredit.
The benchmark Stoxx Europe 600 index gained 1.06%, France’s CAC 40 was ahead 0.91% and Germany’s DAX was 0.84% higher. The FTSE MIB rose 2.49% as Italian bank stocks gained on the back of Unicredit initiating Italy’s biggest ever share issue.
The FTSE Italia All-Share banks index was up 5.83%.
Meanwhile, oil prices were higher as the International Energy Agency said in its monthly report that the agreement by OPEC to cut production by 1.2m barrels a day and by non-OPEC nations to cut by 558,000 barrels should help balance supply and demand by the first half of 2017. West Texas Intermediate rose 0.11% to $52.89 per barrel and Brent crude was up 0.02% at $55.69.
Accendo Markets' head of research Mike van Dulken said: “Sentiment is buoyed by suggestions of progress in recapitalising Italy’s troubled banks as well as expectations that the Fed will - tomorrow night - still signal a cautious path for further rate hikes.”
In corporate news, UniCredit shares rallied as investors welcomed the bank’s announcement of a rights issue of up to €13bn and further job cuts as part of a turnaround plan to boost profitability.
In a restructuring plan unveiled on Tuesday, UniCredit said it intends to launch the rights issue in the first quarter of next year to help remove €17.7bn of bad loans from its balance sheet.
Anheuser Busch InBev nudged a touch higher on news Japanese brewer Asahi will pay $7.8bn for some of its beer brands.
Infrastructure construction group Balfour Beatty was a little firmer after saying it expects to finish the year with a positive cash balance as it completes the first phase of chief executive Leo Quinn's two-year turnaround process.
UBM advanced after agreeing to buy privately-owned Asian exhibitions company Allworld Exhibitions for a cash consideration that values the business at $485m on a debt and cash free basis.
Old Mutual pushed up after saying its asset management business will float on the London Stock Exchange with an offering of 13m shares and the equity raised will be used for “general corporate purposes”.
Housebuilder Bellway ticked up as it reported a 7% jump in reservations in the 18-week period to 4 December and said it expects housing completions for the year to the end of July 2017 to rise by 5%.
France’s Vivendi edged down after revealing it has taken a 3% stake in Italian broadcaster Mediaset, whose shares surged 25%.
On the data front, German economic sentiment was unchanged in December at 13.8, a touch below expectations for a reading of 14.0, according to the latest survey from the ZEW Center for European Economic Research.
However, the current situation index rose to 63.5 from 58.8 the month before, beating estimates of 59.1.
ZEW President Professor Achim Wambach said: “The ZEW indicator of economic sentiment remains at the same level; however, given the fact that the evaluation of the current situation has once again recorded an improvement, the overall assessment is quite positive.”