Banks Lead European Stocks' Bounce

Author:
Publish date:

FRANKFURT -- Stocks rose in a technical bounce after recent losses, with German banks leading the move higher.

Russian and Asian financial woes continued to smolder in the background, but the focus turned to oversold market conditions.

Dresdner Bank

soared 6.5% after being added to

Goldman Sachs'

recommended list. Goldman said Dresdner's recent selloff was overdone. Other German banks enjoyed spillover strength, with

Deutsche Bank

up 5.6% and

Commerzbank

up 5.7%.

The European banking sector also was bolstered by Switzerland's

UBS

, which rose 3.8% after reporting better-than-expected earnings.

In Frankfurt, Germany's

Xetra Dax

was up 118 points, or 2.3%, at 5372, while in London the

FTSE

was up 96, or 1.7%, at 5650 and in Paris the

CAC

was up 74, or 1.9%, at 4012.

Markets here were also cheered by gains in

S&P 500

futures, which were up 7.20 points at 1100.40. European yields fell again today to record lows. The U.S. long bond was yielding 5.46%.

In Frankfurt,

Lufthansa

, which will report earnings this afternoon, was up 3.7%. In Paris, telecoms were big winners, with

France Telecom

(

(FTE)

FTE ADR) up 6% and

Alcatel Alsthom

(

(ALA)

ALA ADR) up 3.2%. In London,

SmithKline Beecham

(

(SBH) - Get Report

SBH ADR) was up 4.1%.

Despite the gains, some observers were skeptical that today's bounce would hold, warning that volumes were extremely light and the global financial environment still dangerous.

Philip Dumas, head of European institutional sales at

Durlacher

in London, said traders who thrive on volatility were driving today's market in the hope of turning a quick profit. Most longer-term institutional investors were still on the sidelines, although a few were "dipping their toes in the water."

Richard Vennekold, head of German equities at

Bayerische Vereinsbank

in Munich, said, "There is no fresh money coming into this market. It's only a technical reaction. Nothing fundamental has changed."

He noted that the situation in Russia was still alarming, with the ruble dropping 9% today against the dollar. The yen was also weaker against the dollar, at 144.53, after Japanese Finance Minister

Kiichi Miyazawa

toned down talk of intervention.

Asian stock markets were mixed overnight, with the

Nikkei

and

Hang Seng

each adding 0.6%. Hong Kong authorities again propped up the market by buying shares, though the most active stock in London was

HSBC

, down 0.5%.