Europe open: Shares rally as Credit Suisse accepts $54bn bailout
Banks were back in favour on European markets at the open on Thursday as troubled Credit Suisse accepted a massive $54bn bailout from the Swiss central bank.
The benchmark Stoxx 600 regional index was up 0.97% in early deals as investors expressed relief that the bank had accepted the loan of up to 50bn Swiss francs to bolster its wobbling balance sheet. Banking stocks dominated the leaders board on the news.
Shares in the lender reversed losses on Wednesday sparked by revelations that it had found "weakness" in its financial reporting and the Saudi National Bank, its largest shareholder said it would not buy more shares in the bank on regulatory grounds.
Focus will now turn to the European Central Bank’s interest rate announcement later in the day. The ECB faces the dilemma of sticking to its planned 0.5% rise to continue fighting inflation or finding a compromise to preserve financial stability.
“It looks increasingly likely that policymakers will opt for a watered-down decision of a 0.25% hike, mindful that going to hard right now, could intensify the banking sectors woes,” said Hargreaves Lansdown analyst Susannah Streeter.
Reporting by Frank Prenesti for Sharecast.com