EFG Eurobank Ergasias, Alpha Bank soar on merger deal By Barbara Kollmeyer, MarketWatch MADRID (MarketWatch) — European stock markets ended with strong gains Monday, led by shares of banks and energy companies after a speech by Federal Reserve Chairman Ben Bernanke last week inspired investors to buy riskier assets, while a merger for two Greek banks sent shares soaring in Athens. The Stoxx Europe 600 index XX:SXXP +1.22% rose 1.2% to close at 228.28, after closing up 1% last week, snapping a four-week losing streak. Markets in London were closed Monday for a holiday. Greek stocks were among the strongest performers in Europe, with the Athens General Index GR:GD +14.37% rising 14.4% after EFG Eurobank Ergasias SA and Alpha Bank SA announced a friendly merger deal. Shares of those two banks surged by around 30% each. “In our view, this merger will herald a new era for the domestic market as it will constitute a key catalyst for a radical transformation of the Greek banking system, with a positive repercussion across the other Greek banks,” said Maria Kanellopoulou, banking analyst at Euroxx Securities, in a note to investors. Other shares in Athens also surged, notably banks, with Piraeus Bank and National Bank of Greece SA NBG +35.33% rising by around 29%. Europe added to gains as Wall Street rose, adding to Friday gains. GLOBAL DOW 1,9501,9001,8501,8001,750 TWTFMTWTFM • MarketWatch Topics: Middle East • Asia Markets | Europe Markets | Lat. Am. • Canadian Markets | Israel Stocks | London • U.S.: Market Snapshot | After Hours TOOLS • Latin American and Canadian indexes • European indexes | Asian indexes MORE ON THE MARKETS • Global Economic Calendar • Bond Report | Oil News | Earnings Watch • Currencies | U.S. Economic Calendar Enthusiasm for stocks was driven by Bernanke’s comments that the Federal Open Market Committee would weigh options on monetary policy at the panel’s next meeting in September. Bernanke spoke Friday at a conference in Jackson Hole, Wyo. Relief that damage from Hurricane Irene wasn’t as bad as feared also helped boost equities. Also helping underpin the positive tone, U.S. data showed consumers spent more and saved less in July, while an industry trade group said the number of Americans signing contracts to purchase new homes declined last month. “What we saw on Friday was a rather less negative view by Fed Chairman Bernanke on the U.S. economy and that obviously fueled expectations that the fear of the possible recession has been appeased somewhat,” said Predrag Dukic, senior equity salesman at CM Capital Markets in Madrid. “That’s the main driver for what we’re seeing today,” he said, referring to gains chalked up in Europe so far. Technical rebound Dukic said last week’s announcement of the continuation of the short-selling ban in some European markets has also helped the market move higher. “A technical rebound was in the cards because we’ve dropped a lot in the last few months. August has been a terrible month,” he said. The Stoxx Europe 600 is down nearly 15% for the month. While he sees gains continuing for this week, driven by Wall Street, he expects volatility to linger, especially with macroeconomic issues in the U.S. and the European debt crisis continuing to linger. “Any triggers will cause volatility on the markets,” he said. European Central Bank President Jean-Claude Trichet told a European Parliament committee on Monday that annual inflation in the euro zone will likely remain above 2% “over the months ahead.” Trichet also said the institution is determined to keep inflation in line with its target of below but close to 2%. Greek banks led a sharp rise across the rest of Europe’s financial sector, with Banco Santander SA STD +2.84% ES:SAN +2.40% adding 2.1%, driving the IBEX 35 index XX:IBEX +2.56% up 2.5%. Energy stocks also gained as Bernanke’s comments fueled some appetite for assets perceived as riskier. Gainers in France Shares of Total SA FR:FP +2.05% TOT +2.81% surged 2% and Societe Generale SA FR:GLE +3.61% added 3.6%, supporting the France CAC 40 index FR:PX1 +2.16% , which rallied 2.2% to end at 3,154.20. Shares of utilities also rose across the board, with Veolia Environnement SA FR:VIE +5.52% VE +6.13% up 5.5% and Suez Environnement SA FR:SEV +3.21% gaining 3.2%. The German DAX 30 index DX:DAX +2.39% surged 2.4% to close at 5,670.07, with gains supported by a 5.2% rise for potash producer K+S AG, while utility RWE AG DE:RWE +4.30% added 5.2% and E.On AG DE:EOAN +4.40% rose 4.6%. Shares of Commerzbank AG DE:CBK +3.70% soared 4.2%. Also up: Shares of adidas AG DE:ADS +3.58% gained 3.7% as several retailers across Europe gained on the view that a recession in the U.S. was less likely. Carrefour SA FR:CA +2.56% gained 2.6% in Paris.

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