HSBC Holdings, BNP Paribas advance as U.S. nationalization fears fade
European shares advanced in early trading on Wednesday, as nationalization fears faded in the banking sector and investors eyed a slew of earnings reports.
Picking up on a sharp rally for U.S. shares on Tuesday, investors pushed the pan-European Dow Jones Stoxx 600 index 1.4% higher to 175.32 early in the session.
Banks led advancers, both on Wall Street and in Europe, with HSBC Holdings up 3.1% in London, BNP Paribas shares up 6.4% in Paris and Santander shares up 3.8% in Madrid.
"Bank shares drew some comfort from comments by (Federal Reserve Chairman Ben) Bernanke that stress tests are unlikely to lead to any of the banks being seized by regulators," noted analysts at Davy Stockbrokers.
The U.S. Treasury is expected to unveil more details Wednesday on planned financial stress tests for its largest institutions, they noted.
Of national markets in Europe, the German DAX 30 index rose 1.3% to 3,947.63, the French CAC-40 index climbed 1.5% to 2,747.85 and the U.K. FTSE 100 index advanced 0.9% to 3,849.76.
Asia stocks also advanced, while U.S. stock futures were muted in early morning action. See Asia Markets.
The gains also followed comments from U.S. President Barack Obama who said Tuesday night that the United States will emerge from the recession "stronger than before." Read more on Obama speech.
There was also some better news on the earnings front.
Shares of German consumer products group Henkel jumped 10.8% after it said that fourth-quarter net income rose to 863 million euros, from 244 million euros a year ago, boosted by the sale of its Ecolab operation.
Henkel said that it expects difficult market conditions to continue through 2009 but expects to outperform its markets in terms of organic growth.
Shares in German stock exchange operator Deutsche Boerse climbed 7.2% after reporting an 18% drop in fourth-quarter net profit to 222.4 million euros ($286.1 million) that still was enough to beat market expectations.
Chocolate maker Cadbury climbed 2%. Its fiscal-year net profit declined to 366 million pounds, from 407 million pounds a year ago but sales rose to 5.4 billion pounds, from 4.7 billion pounds last year.
Shares of Royal Caribbean Cruises climbed 3.3% in Oslo while Carnival shares rose 4.3% in London after Credit Suisse upgraded both cruise operators to outperform from neutral.
The broker cited evidence of solid demand elasticity, a strong value proposition in exploiting a consumer trade-down trend and a lack of corporate exposure among other factors.
