Europe open: Shares rally after US banks bail out First Republic

European shares continued to rally at the open on Friday after large US banks bailed out San Francisco-based First Republic Bank on Thursday and quelled fears of a systemic run on the sector.

The pan-European Stoxx 600 followed strong sessions in the US and Asia, gaining almost 1% in early deals after a collective of banks injected $30bn to rescue First Republic after it was caught in the wake of the collapse of Silicon Valley Bank last week.

In a surprise move on Thursday, the European Central Bank stuck to its guns and proceeded with a 50- basis-point rate hike, despite the turmoil that threatened to engulf embattled lender Credit Suisse which said it would utilise a $54bn loan from the Swiss National Bank to shore up its balance sheet.

In a thin day of corporate and economic data there was little else to drive sentiment. Oil stocks rose in line with a rise in crude prices.

“Oil is rebounding but is on track for its biggest weekly decline of 2023. Saudi Arabia’s energy minister met with Russia’s deputy prime minister Alexander Novak to discuss the volatility in the oil markets and OPEC+’s commitment to balancing the market, which helped the market,” said Interactive Investor head of investment Victoria Scholar.

“The Swiss National Bank’s intervention to provide a lifeline to Credit Suisse, which lifted financial markets also helped to buoy oil prices amid a diminished risk of financial contagion and a significant economic impact.”

Investors are also awaiting final eurozone inflation data at 1000 GMT, which is expected to remain at around 8.5%.

Reporting by Frank Prenesti for Sharecast.com