European Stocks Nudge Higher on Rescue of Portugal Bank

LONDON ( The Deal) -- European markets were a little higher on Monday, as investors shrugged off fears of an imminent rise in U.S. interest rates following Friday's weaker-than-expected employment figures.

The start of the August holiday period has also reduced activity in France and other southern markets, but the surprise central bank rescue of Portugal's Banco Espirito Santo has helped buoy sentiment for now. Several markets, including the Portuguese, rose in early trading, after the Lisbon government said BES would be split into a good bank and a bad bank. The good bank would be put up for sale for early repayment of a Treasury loan, and junior creditors would be "bailed in" -- meaning it is they, and not senior creditors or taxpayers -- who will take the losses. The rescue will be funded from money left over from Portugal's European Union and International Monetary Fund bailout during the financial crisis, which the country exited earlier this year. BES shares are still suspended from trading.

A big exception though was Frankfurt, which is still weighed down by worries about the situation in Ukraine. The German government on Monday formally withdrew an export license for defense contractor Rheinmetall to fulfill a $100 million sale of combat simulation gear to Russia. The market reacted even though the move was widely expected, and the combat training center is largely paid for. Mid-cap Rheinmetall was down 0.66% by mid-morning.

German mid-cap stock Hugo Boss was down 1% at 104.85 euros on speculation that long-standing private equity owner Permira could be preparing to offload its majority stake in the up-scale fashion house.

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