ING shares rise sharply, Ericsson, Prudential also gain
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares rose on Monday, as oil firms advanced, investors welcomed better-than-forecast earnings from network maker Ericsson and ING retook some of the previous session's heavy losses.
The pan-European Dow Jones Stoxx 600 index climbed 2.3% to 219.19.
Oil producers doing well included BP 6.8%, and Royal Dutch Shell up 5.9%, as light sweet crude-oil futures rose $2.40 to $74.25 a barrel ahead of an OPEC meeting later in the week.
Dutch financial giant ING Groep advanced 22.7%, after dropping 27.5% on Friday.
The firm said Sunday that it will receive a 10 billion euro ($13.4 billion) capital injection from the Netherlands government. See full story.
ING is also selling its Taiwanese life insurance business to Fubon Financial Holding Co. for $600 million in shares and subordinated debt securities, a move that will significantly reduce the economic capital attributed to its insurance business.
"All these initiatives are very sensible we believe and we view it positively that management has addresses market concerns in a decisive manner. Following these initiatives, ING is moving from being at the bottom of our sector capital assessment to being among the best capitalized companies," said Merrill Lynch.
Merrill Lynch believes that Europe's leading banks could require an extra 73 billion euros of capital. The broker said investors are likely to attach discounts to share prices of banks that are perceived to be too thinly capitalized.
Societe Generale , BNP Paribas and Deutsche Bank look relatively low on a tangible equity/asset ratio, according to the broker.
Societe Generale shares fell 8.6%. It declined to comment on speculation that the French bank will have to raise more capital, Dow Jones Newswires reported. BNP Paribas shares dropped 6.2%, while Deutsche Bank shares advanced 1.7%.
Overall, the U.K. FTSE 100 index rose 1.7% to 4,132.55, the French CAC-40 index rose 1.5% to 3,379.83 and the German DAX 30 index climbed 0.8% to 4,821.36.
The Russian RTS index advanced 7.6% to 718.50.
U.S. stock futures shot higher on Monday as traders grew more confident that government measures to stabilize the financial system will be successful. See Friday's U.S. Market Snapshot.
A key measure of short-term dollar borrowing costs posted a large drop Monday, as money markets continue to ease in response to massive liquidity injections, bank bailouts and guarantees. The London interbank offered rate, or Libor, for three-month dollar loans fell to 4.05875% from 4.41875% Friday, news reports said
Prudential, Ericsson up
Prudential shares jumped 13% in London amid reports that it's in talks with two investors over the acquisition of a 20% stake in the insurer, a move that could help it mount a $15 billion bid for the Asian operations of AIG. Read more on London markets.
Turning to earnings and shares in Swedish telecommunications equipment firm Ericsson climbed 21.7%.
The world's largest maker of wireless networks posted better-than-expected third-quarter profit, as sales surged and cost cuts started to bear fruit.
